Why is the Tax Evasion so Persistent?

Maurizio Bovi () and Roy Cerqueti

No 111, ISAE Working Papers from ISTAT - Italian National Institute of Statistics - (Rome, ITALY)

Abstract: Virtually all governments seek to fight tax evasion exploiting better and better technological devices. Despite of that the phenomenon still remains alive and kicking all around the world. The foregoing naturally arises the question in the title. This paper develops a simple model to provide some answers to this puzzling issue. Tax evasion is persistent because of the taxpayer's opportunistic behavior and the complex relationships linking it to the cost/quality of the institutional setting. More fundamentally, our model highlights that conditions required for steady state zero-tax evasion (no taxation and/or 100$\%$ probability to be caught) are outside the strategies available for governments.

Keywords: Bureaucracy; Tax evasion; Regulations. (search for similar items in EconPapers)
JEL-codes: D73 H26 O17 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2009-04
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