The Individual Taxpayer Utility Function with Tax Optimization and Fiscal Fraud Environment

Pawe³ Pankiewicz
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Pawe³ Pankiewicz: PhD student at the Department of Finance, University of Economics in Krakow, he is also a tax specialist at Tele-Fonika Kable Sp. z o.o. S.K.A

"e-Finanse", 2011, vol. 7, issue 3, 52-58

Abstract: In this paper I examine a taxpayer utility function determined by the extended set of variables – i.e. consumption, labor and tax-evasion propensity. This constitutes the main framework for the analysis of taxpayer’s decision making process under assumption that in the economy there exist two main reduction methods: a) access to tax optimization techniques, which may decrease effective tax burden and are fully compliant with binding laws, but generate transactional costs and 2) possibility of fiscal fraud – in particular tax evasion, as the alternative method of reducing tax due, which has no direct transactional costs, but involves tax litigation risk.

Keywords: taxation theory; taxpayer utility; tax evasion (search for similar items in EconPapers)
JEL-codes: H21 H26 (search for similar items in EconPapers)
Date: 2011
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