Tax Evasion and Economic Growth∗
نویسندگان
چکیده
In this paper we analyze how the tax compliance policy affects the rate of economic growth. We consider a model of overlapping generations in which the paths of all the macroeconomic variables are endogenously determined and we perform the comparative statics analysis of changes in both the probability of inspection and the penalty fee imposed on tax evaders. We also show the nonoptimality from the growth viewpoint of an inspection policy inducing truthful revelation of income for exogenously given levels of both the penalty and the tax rates. Finally, we show that ”hanging evaders with probability zero” is the most growth enhancing policy among all the inspection policies inducing honest behavior by the taxpayers. JEL classification code: H26, O41.
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