Settlement in Tax Evasion Prosecution

Ines Macho-Stadler and David Perez-Castrillo

UFAE and IAE Working Papers from Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC)

Abstract: It is often argued that even if optimal ex-post, settlement dilutes deterrence ex-ante. We analyze the interest for the tax authority of committing, ex-ante, to a settlement strategy. We show that to commit to the use of settlements is ex-ante optimal when the tax authority receives signals that provide statistical information about the taxpayers' true tax liability. The more informative the signal, the larger the additional expected evenue raised by the tax authority when using settlement as a policy tool.

Keywords: Settlement; Tax evasion; Optimal auditing (search for similar items in EconPapers)
JEL-codes: H26 (search for similar items in EconPapers)
Pages: 23
Date: 2001-10-02
New Economics Papers: this item is included in nep-ent, nep-net, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Working Paper: Settlement in Tax Evasion Prosecution (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:aub:autbar:495.01

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