Tax Evasion and Coordination
نویسنده
چکیده
We consider corporate tax evasion as a decision a¤ecting business partners. There are costs of uncoordinated tax reports, both in terms of catching inspectorsattention and running accounts. If these costs are small, there exist a unique Nash equilibrium of the game between the tax authority and a population of heterogenous rms. In this equilibrium, the miscoordination costs enhance non-compliance if and only if more than 50% of the rms are cheating. This provides one rationale for developing countries to be cautious with employing re ned auditing schemes and for developed countries to promote complicated accounting procedures. JEL Classi cation: H26, H32
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