Audit Lags and Taxpayer Compliance: A Simple Intertemporal Model

Joseph G. Eisenhauer
Additional contact information
Joseph G. Eisenhauer: Canisius College

Journal of Economic Insight, 2006, vol. 32, issue 2, 45-59

Abstract: Conventional analyses of taxpayer behavior predict that individuals will fulfill their tax obligations completely if and only if the expected net gain from tax evasion is zero or negative. In practice, however, taxpayers commonly pay their full taxes despite what appears to be a strong financial incentive for noncompliance. A simple intertemporal model based on audit lags helps to resolve the discrepancy between theory and practice by showing that full compliance may indeed be utility maximizing despite the expectation of positive net gains from evasion, depending upon the taxpayer’s future income, propensity for saving, and degree of risk aversion.

JEL-codes: D81 H26 (search for similar items in EconPapers)
Date: 2006
References: Add references at CitEc
Citations: View citations in EconPapers (1)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mve:journl:v:32:y:2006:i:2:p:45-59

Access Statistics for this article

Journal of Economic Insight is currently edited by Christopher Douglas and Joshua Lewer

More articles in Journal of Economic Insight from Missouri Valley Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Cullen Goenner ().