IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/1251.html
   My bibliography  Save this paper

Tax Evasion and Coordination

Author

Listed:
  • Lipatov, Vilen

Abstract

We consider corporate tax evasion as a decision affecting business partners. There are costs of uncoordinated tax reports, both in terms of catching inspectors' attention and running accounts. If these costs are small, there exist a unique Nash equilibrium of the game between the tax authority and a population of heterogenous firms. In this equilibrium, the miscoordination costs enhance non-compliance if and only if more than 50% of the firms are cheating. This provides one rationale for developing countries to be cautious with employing refined auditing schemes and for developed countries to promote complicated accounting procedures.

Suggested Citation

  • Lipatov, Vilen, 2006. "Tax Evasion and Coordination," MPRA Paper 1251, University Library of Munich, Germany, revised Dec 2006.
  • Handle: RePEc:pra:mprapa:1251
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/1251/1/MPRA_paper_1251.pdf
    File Function: original version
    Download Restriction: no

    File URL: https://mpra.ub.uni-muenchen.de/21542/3/MPRA_paper_21542.pdf
    File Function: revised version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Crocker, Keith J. & Slemrod, Joel, 2005. "Corporate tax evasion with agency costs," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1593-1610, September.
    2. Graetz, Michael J & Reinganum, Jennifer F & Wilde, Louis L, 1986. "The Tax Compliance Game: Toward an Interactive Theory of Law Enforcement," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 2(1), pages 1-32, Spring.
    3. Reinganum, Jennifer F & Wilde, Louis L, 1986. "Equilibrium Verification and Reporting Policies in a Model of Tax Compliance," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(3), pages 739-760, October.
    4. Dominik H. Enste & Friedrich Schneider, 2000. "Shadow Economies: Size, Causes, and Consequences," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 77-114, March.
    5. Lipatov, Vilen, 2012. "Corporate tax evasion: The case for specialists," Journal of Economic Behavior & Organization, Elsevier, vol. 81(1), pages 185-206.
    6. James Andreoni & Brian Erard & Jonathan Feinstein, 1998. "Tax Compliance," Journal of Economic Literature, American Economic Association, vol. 36(2), pages 818-860, June.
    7. Lipatov, Vilen, 2003. "Evolution of Tax Evasion," MPRA Paper 966, University Library of Munich, Germany, revised 06 Dec 2005.
    8. Alm, James & McKee, Michael, 2004. "Tax compliance as a coordination game," Journal of Economic Behavior & Organization, Elsevier, vol. 54(3), pages 297-312, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. James Alm, 2019. "What Motivates Tax Compliance?," Journal of Economic Surveys, Wiley Blackwell, vol. 33(2), pages 353-388, April.
    2. Lipatov, Vilen, 2003. "Evolution of Tax Evasion," MPRA Paper 966, University Library of Munich, Germany, revised 06 Dec 2005.
    3. Lipatov, Vilen, 2012. "Corporate tax evasion: The case for specialists," Journal of Economic Behavior & Organization, Elsevier, vol. 81(1), pages 185-206.
    4. Phillips, Mark D., 2014. "Deterrence vs. gamesmanship: Taxpayer response to targeted audits and endogenous penalties," Journal of Economic Behavior & Organization, Elsevier, vol. 100(C), pages 81-98.
    5. Juan P Mendoza & Jacco L Wielhouwer, 2015. "Only the Carrot, Not the Stick: Incorporating Trust into the Enforcement of Regulation," PLOS ONE, Public Library of Science, vol. 10(2), pages 1-18, February.
    6. Roberto José Arias, 2004. "Reglas de selección para la fiscalización de Impuestos a las Ventas," Revista de Economía y Estadística, Universidad Nacional de Córdoba, Facultad de Ciencias Económicas, Instituto de Economía y Finanzas, vol. 42(2), pages 29-62, Diciembre.
    7. Marisa Ratto & Thibaud Verge, 2002. "Optimal Audit Policy and Heterogenous Agents," The Centre for Market and Public Organisation 02/054, The Centre for Market and Public Organisation, University of Bristol, UK.
    8. Henrik Jacobsen Kleven & Claus Thustrup Kreiner & Emmanuel Saez, 2016. "Why Can Modern Governments Tax So Much? An Agency Model of Firms as Fiscal Intermediaries," Economica, London School of Economics and Political Science, vol. 83(330), pages 219-246, April.
    9. Bayer, Ralph-C & Sutter, Matthias, 2009. "The excess burden of tax evasion--An experimental detection-concealment contest," European Economic Review, Elsevier, vol. 53(5), pages 527-543, July.
    10. Orviska, Marta & Caplanova, Anetta & Medved, Jozef & Hudson, John, 2006. "A cross-section approach to measuring the shadow economy," Journal of Policy Modeling, Elsevier, vol. 28(7), pages 713-724, October.
    11. Benno Torgler, 2003. "Beyond Punishment: a tax compliance experiment with taxpayers in Costa Rica," Revista de Analisis Economico – Economic Analysis Review, Universidad Alberto Hurtado/School of Economics and Business, vol. 18(1), pages 27-56, June.
    12. Andrew Yim, 2009. "Efficient Committed Budget for Implementing Target Audit Probability for Many Inspectees," Management Science, INFORMS, vol. 55(12), pages 2000-2018, December.
    13. Fujin Zhou & Remco Oostendorp, 2014. "Measuring True Sales and Underreporting with Matched Firm-Level Survey and Tax Office Data," The Review of Economics and Statistics, MIT Press, vol. 96(3), pages 563-576, July.
    14. Sagit Leviner, 2008. "An overview: A new era of tax enforcement – from “big stick” to responsive regulation," Regulation & Governance, John Wiley & Sons, vol. 2(3), pages 360-380, September.
    15. Alm, James & Shimshack, Jay, 2014. "Environmental Enforcement and Compliance: Lessons from Pollution, Safety, and Tax Settings," Foundations and Trends(R) in Microeconomics, now publishers, vol. 10(4), pages 209-274, December.
    16. Hashimzade, Nigar & Huang, Zhanyi & Myles, Gareth D., 2010. "Tax fraud by firms and optimal auditing," International Review of Law and Economics, Elsevier, vol. 30(1), pages 10-17, March.
    17. Leandro Arozamena & Martin Besfamille & Pablo Sanguinetti, 2010. "Optimal taxes and penalties when the government cannot commit to its audit policy," Department of Economics Working Papers 2010-10, Universidad Torcuato Di Tella.
    18. Slemrod, Joel & Yitzhaki, Shlomo, 2002. "Tax avoidance, evasion, and administration," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 22, pages 1423-1470, Elsevier.
    19. Anastasios Xepapadeas & Yannis Petrohilos-Andrianos, 2013. "On the Evolution of Compliance and Regulation with Tax Evading Agents," DEOS Working Papers 1325, Athens University of Economics and Business.
    20. Fershtman, Chaim & Lipatov, Vilen, 2009. "Political Support and Tax Compliance: A Social Interaction Approach," Foerder Institute for Economic Research Working Papers 275731, Tel-Aviv University > Foerder Institute for Economic Research.

    More about this item

    Keywords

    tax evasion; coordination; business partners;
    All these keywords.

    JEL classification:

    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:1251. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.