Finding Out Who the Crooks Are - Tax Evasion with Sequential Auditing

Ralph-C Bayer ()

No 2004-10, School of Economics and Public Policy Working Papers from University of Adelaide, School of Economics and Public Policy

Abstract: This paper investigates multi-item moral hazard with auditing contests. Although the presented model is widely applicable, we choose tax evasion as an exemplary application. We introduce a tax-evasion model where tax authority and taxpayer invest in detection and concealment. The taxpayers have multiple potential income sources and are heterogeneous with respect to their evasion scruples. The tax authority - unable to commit to an audit strategy - observes a tax declaration and chooses its auditing efforts. We show that a tax inspector prefers to audit source by source until he finds evidence for evasion to conduct a full-scale audit thereafter.

Keywords: moral hazard; auditing rules; contest; tax evasion (search for similar items in EconPapers)
JEL-codes: D82 H26 K42 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2004
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://media.adelaide.edu.au/economics/papers/doc/wp2004-10.pdf (application/pdf)

Related works:
Journal Article: FINDING OUT WHO THE CROOKS ARE — TAX EVASION WITH SEQUENTIAL AUDITING (2006)
Working Paper: Finding out who the crooks are - Tax evasion with sequential auditing (2004)
Working Paper: Finding out Who the Crooks Are – Tax Evasion with Sequential Auditing (2003)
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:adl:wpaper:2004-10

Access Statistics for this paper

More papers in School of Economics and Public Policy Working Papers from University of Adelaide, School of Economics and Public Policy Contact information at EDIRC.
Bibliographic data for series maintained by Qazi Haque ().