Distributional Implications of Joint Tax Evasion

Odd E Nygård, Joel Slemrod and Thor Thoresen

The Economic Journal, 2019, vol. 129, issue 620, 1894-1923

Abstract: Both buyers and sellers of goods and services may benefit from letting their economic transactions go unrecorded for tax purposes. The supplier reduces his tax burden by underreporting income and sales, whereas the consumer may gain from buying a non-taxed lower-priced product. The distributional implications of such joint tax evasion depend on the amounts evaded, on where the evaders on both sides of the market are found in the income distribution, and on how the financial gain is split. Our empirical investigations show that the tax evasion-controlled estimate of income inequality in Norway exhibits more income dispersion than official estimates.

Date: 2019
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Working Paper: Distributional Implications of Joint Tax Evasion (2016)
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