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Multiple Modes of Tax Evasion: Theory and Evidence

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  • Martinez-Vazquez, Jorge
  • Rider, Mark

Abstract

In this paper, we examine the theoretical and empirical implications of accounting for multiple modes of tax evasion. We find that increasing the probability of detection in a given mode has an ambiguous effect on compliance in the targeted mode as well as the untargeted mode. In order to gain greater insight into taxpayer behavior, we use the 1985 TCMP to estimate an empirical model with two modes of evasion. We find that increased enforcement effort has a positive effect on compliance in the targeted mode, a negative effect in the untargeted mode, and a positive overall effect on tax compliance.

Suggested Citation

  • Martinez-Vazquez, Jorge & Rider, Mark, 2005. "Multiple Modes of Tax Evasion: Theory and Evidence," National Tax Journal, National Tax Association;National Tax Journal, vol. 58(1), pages 51-76, March.
    • Handle: RePEc:ntj:journl:v:58:y:2005:i:1:p:51-76
    DOI: 10.17310/ntj.2005.1.03
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    Cited by:

    1. Laszlo Goerke, 2007. "Corporate and personal income tax declarations," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 14(3), pages 281-292, June.
    2. James Alm, 2019. "What Motivates Tax Compliance?," Journal of Economic Surveys, Wiley Blackwell, vol. 33(2), pages 353-388, April.
    3. Joerg Paetzold, 2019. "How do taxpayers respond to a large kink? Evidence on earnings and deduction behavior from Austria," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(1), pages 167-197, February.
    4. Laszlo Goerke, 2008. "Bureaucratic corruption and profit tax evasion," Economics of Governance, Springer, vol. 9(2), pages 177-196, May.
    5. James Alm & Benno Torgler, 2011. "Do Ethics Matter? Tax Compliance and Morality," Journal of Business Ethics, Springer, vol. 101(4), pages 635-651, July.
    6. Yuriy Gorodnichenko & Jorge Martinez-Vazquez & Klara Sabirianova Peter, 2009. "Myth and Reality of Flat Tax Reform: Micro Estimates of Tax Evasion Response and Welfare Effects in Russia," Journal of Political Economy, University of Chicago Press, vol. 117(3), pages 504-554, June.
    7. James Serocki & Kevin Murphy, 2015. "The effect of the U.S. federal income tax appraisal requirement on noncash charitable contributions for individuals," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 39(1), pages 171-188, January.
    8. Ronald G. Cummings & Jorge Martinez-Vazquez & Michael McKee, 2006. "Experimental Evidence on Mixing Modes in Income Tax Evasion," Public Finance Review, , vol. 34(6), pages 663-686, November.
    9. James Alm & John Deskins & Michael McKee, 2009. "Do Individuals Comply on Income Not Reported by Their Employer?," Public Finance Review, , vol. 37(2), pages 120-141, March.
    10. Boris Maciejovsky & Herbert Schwarzenberger & Erich Kirchler, 2012. "Rationality Versus Emotions: The Case of Tax Ethics and Compliance," Journal of Business Ethics, Springer, vol. 109(3), pages 339-350, September.
    11. Yuriy Gorodnichenko & Jorge Martinez-Vazquez & Klara Sabirianova Peter, 2007. "Myth and Reality of Flat Tax Reform: Tax Evasion and Real Side Response of Russian Households," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0728, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    12. Semjén, András, 2017. "Az adózói magatartás különféle magyarázatai [Various explanations for tax compliance]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(2), pages 140-184.
    13. Lars P. Feld & Bruno S. Frey, 2007. "Tax Evasion, Tax Amnesties and the Psychological Tax Contract," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0729, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    14. Lucy F. Ackert & Ann B. Gillette & Jorge Martinez-Vazquez & Mark Rider, 2009. "Risk Tolerance, Self-Interest, and Social Preferences," Experimental Economics Center Working Paper Series 2009-04, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University, revised Feb 2011.
    15. Diana Falsetta & Jennifer K. Schafer & George T. Tsakumis, 2024. "How Government Spending Impacts Tax Compliance," Journal of Business Ethics, Springer, vol. 190(2), pages 513-530, March.
    16. Bethencourt, Carlos & Kunze, Lars, 2020. "Social norms and economic growth in a model with labor and capital income tax evasion," Economic Modelling, Elsevier, vol. 86(C), pages 170-182.
    17. Lars P. Feld & Andreas J. Schmidt & Friedrich Schneider, 2011. "Deterrence Policy and the Size of the Shadow Economy in Germany: An Institutional and Empirical Analysis," Chapters, in: Friedrich Schneider (ed.), Handbook on the Shadow Economy, chapter 12, Edward Elgar Publishing.
    18. Cebula, Richard J., 2020. "The Relative Tax Gap Hypothesis: An Exploratory Analysis and Application to U.S. Financial Markets," American Business Review, Pompea College of Business, University of New Haven, vol. 23(1), pages 35-52, May.
    19. Mohammad Abd Alaffo AlAdham & Mohammed Abdallah Abukhadijeh & Mohammad Fayez Qasem, 2016. "Tax Evasion and Tax Awareness Evidence from Jordan," International Business Research, Canadian Center of Science and Education, vol. 9(12), pages 65-75, December.
    20. Robina Ather Ahmed & Mark Rider, 2008. "Pakistan’s Tax Gap: Estimates By Tax Calculation and Methodology," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0811, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.

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