Tax Evasion and the Allocation of Capital

Don Fullerton () and Marios Karayannis

No 4581, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The efficiency cost of capital misallocations between the corporate sector and the noncorporate sector is typically measured using statutory tax differences. Corporate-source income tax compliance is high because of third party reporting, however, while noncorporate rental income tax compliance is low. Differential evasion thus exacerbates statutory differences and enlarges the efficiency cost. To measure this effect, we build a numerical general equilibrium model where households simultaneously choose portfolios of risky assets and fractions of income to report.

JEL-codes: D58 H21 (search for similar items in EconPapers)
Date: 1993-12
Note: PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published as Journal of Public Economics, Vol 55, no. 2 (October 1994): 257-278.

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Journal Article: Tax evasion and the allocation of capital (1994)
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