Whistle-blowers as a Deterrent to Tax Evasion

Yosef Mealem, Yossef Tobol and Gideon Yaniv
Additional contact information
Yosef Mealem: Netanya Academic College, Israel
Yossef Tobol: Bar-Ilan University, Ramat-Gan, Israel
Gideon Yaniv: COM Academic Studies, Rishon LeZion, Israel, gidyan@colman.ac

Public Finance Review, 2010, vol. 38, issue 3, 306-320

Abstract: The economic literature on audit design has almost entirely ignored tax agencies’ practical reliance on whistle-blowers for the successful conduct of tax investigations. The authors compare the tax agency’s performance under a one-round blind-audit policy and a two-round whistle-blowing-intensive policy that invites whistle-blowers to blow the whistle on tax evaders who have escaped auditing in the first round. The authors show that if providing incentives for tax evasion is desirable under the one-round blind-audit scheme, the tax agency might be better off running a second, whistle-blowing-triggered, round, threatening to audit a sufficiently high fraction of the denounced evaders that will deter them from evading taxes. Hence, there will actually be no denouncing by honest whistle-blowers, who will find themselves serving as a deterrent to tax evasion without actually satisfying their desire for revenge or collecting a monetary reward. Committed to its threat, the tax agency will only be auditing falsely denounced non-evaders.

Keywords: tax evasion; whistle-blowers; tax agency; audit design (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/1091142110367857 (text/html)

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:sae:pubfin:v:38:y:2010:i:3:p:306-320

DOI: 10.1177/1091142110367857

Access Statistics for this article

More articles in Public Finance Review
Bibliographic data for series maintained by SAGE Publications ().