 Institutional flexibility in tax law and enforcementEmanuela Carbonara, Phil Curry, Claire A. Hill and Francesco Parisi International Review of Law and Economics, 2024, vol. 79, issue C Abstract: This paper examines how governments can optimally audit to discourage tax avoidance. We assume that an accounting firm designs and promotes strategies for tax avoidance. This firm adapts the quality and diversity of these strategies in response to shifts in government policies. We investigate when it is more effective to approve some methods while cracking down on others, rather than targeting all tax-avoidance activities uniformly. We find that selectively enforcing against specific methods can be optimal. This approach not only reduces the quality but also limits the variety of tax avoidance activities in the market and positively impacts the government’s tax revenue collection. Our analysis provides practical insights, linking the costs of auditing with the interaction between enforcement, the quality of tax avoidance methods, and tax revenue outcomes. Keywords: Tax avoidance; Tax policy; Loopholes; Flexibility in enforcement; Selective auditing (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:irlaec:v:79:y:2024:i:c:s0144818824000358 DOI: 10.1016/j.irle.2024.106215 Access Statistics for this article International Review of Law and Economics is currently edited by C. Ott, A. W. Katz and H-B. Schäfer More articles in International Review of Law and Economics from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.