The runaway taxpayer
Umberto Galmarini (),
Simone Pellegrino,
Massimiliano Piacenza and
Gilberto Turati ()
International Tax and Public Finance, 2014, vol. 21, issue 3, 468-497
Abstract:
In order to analyze the determinants of tax evasion, the existing literature on individual tax compliance typically takes a ‘prior-to-audit’ point of view. This paper focuses on a ‘post-audit, post-detection’—so far unexplored—framework, by investigating what happens after tax evasion has been discovered and noncompliant taxpayers are asked to pay their debts. We first develop a two-period dynamic model of individual choice, considering an individual that has been already audited and detected as tax evader, who knows that Tax Authorities are looking for her to cash the due amount. We derive the optimal decision of running away in order to avoid paying the bill, and show that the experience of a prior tax notice reduces the probability to behave as a scofflaw. We then exploit information on ‘post-audit, post-detection’ tax compliance provided by an Italian collection agency for the period 2004–2007 to empirically assess the relationship between prior tax notices and unlawful behavior. The evidence from alternative logit model specifications supports our theoretical prediction: successful tax notices are negatively correlated with the probability of running away. Copyright Springer Science+Business Media New York 2014
Keywords: Tax evasion; Tax collection; Post-audit tax enforcement; Tax notice; D81; H26; H30; K42 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations:
Downloads: (external link)
http://hdl.handle.net/10.1007/s10797-013-9275-y (text/html)
Access to full text is restricted to subscribers.
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:kap:itaxpf:v:21:y:2014:i:3:p:468-497
Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/10797/PS2
DOI: 10.1007/s10797-013-9275-y
Access Statistics for this article
International Tax and Public Finance is currently edited by Ronald B. Davies and Kimberly Scharf
More articles in International Tax and Public Finance from Springer, International Institute of Public Finance Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().