Itemised deductions: a device to reduce tax evasion

Amedeo Piolatto

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: Direct incentives and punishments are the most common instruments to fight tax evasion. The theoretical literature disregarded indirect schemes, such as itemised deductions, in which an agent has an interest in that other agents declare their revenue. Itemised deductions provide an incentive for consumers to declare their purchases, and this forces sellers to do the same. I show that, for any level of taxation, it is possible to increase tax proceeds by choosing the proper level of itemised deduction: the cost for the government on the consumers' side is more than compensated by the extra proceeds on the sellers' side.

Keywords: tax evasion; itemised deductions; substitutes goods; quantity competition. (search for similar items in EconPapers)
JEL-codes: H00 H20 H26 H30 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2010-11
New Economics Papers: this item is included in nep-acc, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published by Ivie

Downloads: (external link)
http://www.ivie.es/downloads/docs/wpasad/wpasad-2010-33.pdf Fisrt version / Primera version, 2010 (application/pdf)

Related works:
Journal Article: Itemised Deductions: A Device to Reduce Tax Evasion (2015)
Journal Article: Itemised Deductions: A Device to Reduce Tax Evasion (2015)
Working Paper: Itemised deductions: a device to reduce tax evasion (2014)
Working Paper: Itemised Deductions: A Device to Reduce Tax Evasion (2010)
Working Paper: Itemised Deductions: A Device to Reduce Tax Evasion (2010)
Working Paper: Tax evasion and deductible expenses (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:2010-33

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