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Decomposing Revenue Effects of Tax Evasion and Tax Structure Changes

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  • Arindam Das-Gupta
  • Ira Gang

Abstract

This paper proposes a method for evaluating the impact of tax structure changes on tax revenue. The technique consists of decomposing the gap between actual revenue and potential revenue into components attributable to changes in (i) the tax rate structure (ii) deductions and (iii) tax evasion. Our results indicate that, for the Indian reform episode we examine, there were initial gains which could not be sustained over time. The magnitude of the gains from the reform were limited and failed to significantly curtail losses from tax evasion. Copyright Kluwer Academic Publishers 2000

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  • Arindam Das-Gupta & Ira Gang, 2000. "Decomposing Revenue Effects of Tax Evasion and Tax Structure Changes," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 7(2), pages 177-194, March.
    • Handle: RePEc:kap:itaxpf:v:7:y:2000:i:2:p:177-194
    DOI: 10.1023/A:1008704520816
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    1. Daniel R. Feenberg & James M. Poterba, 1993. "Income Inequality and the Incomes of Very High-Income Taxpayers: Evidence from Tax Returns," NBER Chapters, in: Tax Policy and the Economy, Volume 7, pages 145-177, National Bureau of Economic Research, Inc.
    2. David E. Altig & Charles T. Carlstrom, 1994. "The efficiency and welfare effects of tax reform: are fewer tax brackets better than more?," Economic Review, Federal Reserve Bank of Cleveland, vol. 30(Q IV), pages 30-42.
    3. Allingham, Michael G. & Sandmo, Agnar, 1972. "Income tax evasion: a theoretical analysis," Journal of Public Economics, Elsevier, vol. 1(3-4), pages 323-338, November.
    4. N. Jayaram & Surendra K. Gupta & A.P. Barnabas & Sachchidananda & P.S. Pachauri & M.L. Khattar & B.N. Sampath & H. R. Khanna, 1985. "India," India Quarterly: A Journal of International Affairs, , vol. 41(1), pages 177-179, January.
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    Cited by:

    1. M. Yu. Malkina & R. V. Balakin, 2020. "Decomposition of Tax Revenue Growth in Russian Regions," Regional Research of Russia, Springer, vol. 10(2), pages 117-126, April.
    2. Gil S. Epstein & Ira N. Gang, 2019. "Inequality, good governance, and endemic corruption," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(5), pages 999-1017, October.
    3. Rajat Deb & Sourav Chakraborty, 2017. "Tax Perception and Tax Evasion," IIM Kozhikode Society & Management Review, , vol. 6(2), pages 174-185, July.
    4. Gil S. Epstein & Ira N. Gang, 2010. "Why Pay Taxes When No One Else Does?," Review of Development Economics, Wiley Blackwell, vol. 14(2), pages 374-385, May.
    5. Gil S. Epstein & Ira N. Gang, 2016. "Taxation, social protection, and governance decentralization," WIDER Working Paper Series wp-2016-101, World Institute for Development Economic Research (UNU-WIDER).
    6. Gil S. Epstein & Ira N. Gang, 2019. "Inequality, good governance, and endemic corruption," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(5), pages 999-1017, October.

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