The Excess Burden of Tax Evasion: An Experimental Detection-Concealment Contest

Ralph-C Bayer and Matthias Sutter

No 2003-05, Adelaide Economics Working Papers from Adelaide University, School of Economics

Abstract: We present an experimental study on the wasted resources associated with tax evasion. This waste arises from taxpayers and tax authorities, investing costly effort in concealment, respectively detection, of tax evasion. We show that (socially inefficient) efforts depend positively on the prevailing tax rate, but not on the fine which is imposed in case of detected tax evasion. The frequency of evasion increases with tax rates. Additionally, we observe less tax evasion than a model with risk neutral taxpayers predicts. We find evidence that this is rather due to individual moral constraints than due to risk aversion.

Keywords: tax evasion; contest; experiment; tax rates; fines (search for similar items in EconPapers)
JEL-codes: C91 H26 K42 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2003
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: The excess burden of tax evasion--An experimental detection-concealment contest (2009)
Working Paper: The Excess Burden of Tax Evasion: An Experimental Detection-Concealment Contest (2004)
Working Paper: The excess burden of tax evasion - An experimental detection- concealment contest (2004)
Working Paper: The excess burden of tax evasion – An experimental detection-concealment contest (2003)
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