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Tax Evasion By Misinforming Withholding Agents

Author

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  • Gideon Yaniv

    (National Insurance Institute and Tel-Aviv University, Israel)

Abstract

This article inquires into a wage earner's decision to evade taxes by splitting his or Abstract her work efforts between several jobs while misinforming his or her employers regarding employment elsewhere. Under exact or approximate withholding by progres sive marginal rates, this behavior, accompanied by the failure to file a tax return, results in the application of lower tax brackets to earnings. This article characterizes the properties of the worker's effort allocation problem under progressive withhold ing, showing that exact withholding, considered to be more costly to administer than approximate withholding, might also be, contrary to common belief, equally and even more evadable than the latter.

Suggested Citation

  • Gideon Yaniv, 1998. "Tax Evasion By Misinforming Withholding Agents," Public Finance Review, , vol. 26(4), pages 362-375, July.
    • Handle: RePEc:sae:pubfin:v:26:y:1998:i:4:p:362-375
    DOI: 10.1177/109114219802600404
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    References listed on IDEAS

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    1. Shishko, Robert & Rostker, Bernard, 1976. "The Economics of Multiple Job Holding," American Economic Review, American Economic Association, vol. 66(3), pages 298-308, June.
    2. Cowell, Frank A., 1985. "Tax evasion with labour income," Journal of Public Economics, Elsevier, vol. 26(1), pages 19-34, February.
    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.
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    Cited by:

    1. Martin Abraham & Kerstin Lorek & Friedemann Richter & Matthias Wrede, 2017. "Collusive tax evasion and social norms," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 24(2), pages 179-197, April.
    2. Mirco, Tonin, 2006. "The Effects of the Minimum Wage in an Economy with Tax Evasion," Seminar Papers 747, Stockholm University, Institute for International Economic Studies.

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