TAX EVASION AND RELATIVE CONTRIBUTION

Judith Panadés ()

Working Papers from Instituto de Estudios Fiscales

Abstract: . This paper analyzes the relationship between tax rate levels and tax evasion in a context where the utility of a taxpayer depends on both his own consumption and his relative position with respect to the average declared income of the economy. In this framework, if the taxpayer declares an amount of his income greater (smaller) than the average of the economy, his utility will decrease (increase). I show that if the externality from the others' declared income is large enough, then an increase in the tax rate leads to more evasion.

Keywords: Tax evasion; relative tax contribution (search for similar items in EconPapers)
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