ADVANCE TAX PAYMENT AND TAX EVASION: EXPECTED UTILITY ANALYSIS

Keisuke Morita ()
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Keisuke Morita: Faculty of Economics, Kanagawa University, 3-27-1, Rokkakubashi, Kanagawa-ku, Yokohama-shi, Kanagawa, 221-8686, Japan

The Singapore Economic Review (SER), 2014, vol. 59, issue 02, 1-8

Abstract: The traditional theoretical analysis of tax evasion fails to explain the empirical finding that declared income decreases with the tax rate. We show that one of the reasons for this result is that many such studies overlook advance tax payments in their analyses. Furthermore, we investigate how advance tax payments influence the extent of tax evasion. We conclude that the influence of advance tax payments on the extent of tax evasion depends on whether an individual's preference is based on expected utility theory or prospect theory.

Keywords: Advance tax payments; expected utility theory; tax evasion; H21; H26 (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1142/S0217590814500143

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