Why Pay Taxes When No One Else Does?

Gil Epstein and Ira Gang

Review of Development Economics, 2010, vol. 14, issue 2, 374-385

Abstract: In this paper we try to understand the phenomenon whereby a large proportion of the population evades tax payments. We present a model which incorporates elements from the theory of information cascades with the standard model of tax evasion and analyze the connection between the decision of a potential tax evader, the number of tax evaders, and the number caught in previous periods. General conditions exist under which any expected utility maximizing potential tax evaders will decide to emulate other tax evaders.

Date: 2010
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https://doi.org/10.1111/j.1467-9361.2010.00559.x

Related works:
Working Paper: Why Pay Taxes When No One Else Does? (2009)
Working Paper: Why Pay Taxes When No One Else Does? (2009)
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