Anti-Tax Revolutions and Symbolic Prosecutions

Holger C. Wolf

No 4337, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We extend the traditional tax evasion model to take account of the interaction between individual compliance decisions and perceived detection probabilities. The generalization provides a rationale for "anti-tax revolutions" characterized by a sudden shift of a significant fraction of the tax paying citizenry from compliance to tax evasion with unchanged fundamentals and monitoring rules. We establish, with an application to hyperinflation, the possibility of multiple compliance equilibria with lock-in effects. Finally, we demonstrate the potential cost effectiveness of "symbolic prosecution" as an equilibrium shifting device in preference to permanent changes the monitoring process.

JEL-codes: E62 H26 (search for similar items in EconPapers)
Date: 1993-04
Note: ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published as Kyklos, 1996.

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