Tax Collection Costs, Tax Evasion and Optimal Interest Rates

value added tax and tax evasion

The phenomenon of tax evasion has been always one of the most major issues among economists due to it's devastating effects on the economy and the process of economic development. Many scholars have always sought to provide solutions to reduce and limit tax evasion. The introduction of the VAT system can be seen as a milestone in the area of economic transparency and tax evasion, which refers t...

Tax evasion and the optimal inflation tax

We developed a simple monetary model to study the effects of tax evasion on the optimal inflation tax. The model is constructed so that inflation might be an indirect way of taxing the underground sector of the economy. We show that while there are theoretical reasons for positive optimal inflation rates, the effects are quantitatively small, even in countries with large underground sectors. We...

Optimal dynamic tax evasion

We study optimal dynamic tax evasion in the framework proposed by Lin and Yang (2001) and Dzhumashev and Gahramanov (2011) with somemodifications: a more flexible utility function, a more realistic audit process, and a penalty function which can be defined both on evaded income and evaded taxes. In the former case the elasticity between tax rate and tax evasion is positive, unless the subsisten...

Monitoring Expenditures on Tax Collection and Tax Evasion: The Case of Iran

T he main aim of this paper is analyzing the relationship between tax evasion and the monitoring expenditure on tax collectionin Iran. For doing so, we have used a simulation model for determining optimal level of monitoring expenses on tax collection. The results showed that, a greater portion of government expenses must be allocated to monitor the tax collection, although do this reduces...

Corporate Tax Evasion with Agency Costs