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Tax Evasion, Intrinsic Motivation, and the Evolutionary Effects of Tax Reforms

Fabio Lamantia, Mario Pezzino () and Fabio Tramontana

Economics Discussion Paper Series from Economics, The University of Manchester

Abstract: The paper studies tax evasion in an evolutionary setting. In addition to standard variables such as the fine they may have to pay if found guilty or the probability of being audited, individualsíinclination to engage in tax evasion may also be affected by social interactions. Individuals socially interact with other taxpayers and, doing so, they learn the payoff differential between paying and evading taxes. Moreover, expected payoffs may include reputational costs or rewards awarded by society after an individual is audited. The paper shows that (i) social norms may play a very important role in defining the long run evolution of tax evasion and, consequently, (ii) policymakers should consider reforms that would increase social awareness and information rather than more (financially and politically) expensive traditional auditing instruments; in addition, (iii) fiscal/auditing policies should be carefully tailored to the particular economic and social setting in place in a country.

JEL-codes: C73 H26 H30 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-acc, nep-evo, nep-iue, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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