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

Ralph-C Bayer () and Matthias Sutter

No 2004-07, School of Economics and Public Policy Working Papers from University of Adelaide, School of Economics and Public Policy

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 the concealment and detection of tax evasion. We show that these socially inefficient efforts - as well as the frequency of tax evasion - depend positively on the prevailing tax rate, but not on the fine which is imposed in the event of detected tax evasion. Tax evasion is less frequent, though, than a model with risk neutral taxpayers predicts. We find evidence that this is due to individual moral constraints rather than 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: 35 pages
Date: 2004
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Citations: View citations in EconPapers (7)

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https://media.adelaide.edu.au/economics/papers/doc/wp2004-07.pdf (application/pdf)

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 (2003)
Working Paper: The excess burden of tax evasion – An experimental detection-concealment contest (2003)
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