Fair tax evasion

Erling Barth, Alexander Cappelen and Tone Ognedal

No 11/2013, Discussion Paper Series in Economics from Norwegian School of Economics, Department of Economics

Abstract: In this paper we analyse how fairness considerations, in particular considerations of just income distribution, affect whether or not people find tax evasion justifiable and their willingness to evade taxes. Using data from the Norwegian “Hidden Labour Market Survey” we show that individuals with low hourly wages and long working hours have a higher probability of justifying tax evasion. These are individuals that arguably are treated unfairly in a tax system that taxes an individual’s total income without taking into account how many hours the individual has worked. The same individuals are also more willing and likely to take home income without reporting it to the tax authorities. The results are consistent with a model in which individuals make a trade-off between economic gains and fairness considerations when they make decisions about tax evasion. Taken together our results suggest that considerations of fair income distribution are important for the analysis of tax evasion.

Keywords: Tax evasion; redistributive taxation; fair income distribution. (search for similar items in EconPapers)
JEL-codes: D63 H26 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2013-04-30
New Economics Papers: this item is included in nep-iue, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Fair Tax Evasion (2013)
Working Paper: Fair Tax Evasion (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:nhheco:2013_011

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