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...

This paper reviews the evidence on tax non-compliance and the “underground economy” in Canada, with an emphasis on the reporting activities of self-employed individuals and businesses. Indirect methods of estimating the size of the unrecorded sector are found to generate widely varying, and in a number of cases implausible, estimates of underground activity. More direct evidence from enforcemen...

This paper reviews the evidence on tax non-compliance and the “underground economy” in Canada, with an emphasis on the reporting activities of self-employed individuals and businesses. Indirect methods of estimating the size of the unrecorded sector are found to generate widely varying, and in a number of cases implausible, estimates of underground activity. More direct evidence from enforcemen...

This paper studies the issue of tax evasion in the context of the underground economy. A dynamic general equilibrium model is built where individual households and entrepreneurs decide rationally whether to go underground and under-report their earnings. These behaviors affect tax revenues, which are used to finance productive public services. This model is applied to the Czech Republic, becaus...

I ncreased expenditures and the government size is an important issue in public sector economics. In this regard, various theories have been developed in order to justify the reasons for the public expenditure growth, and the theories have been empirically tested. One of the outlooks explaining the government expenditures growth and the economy size, is fiscal illusion approach. According ...

Because of endogeneity problems very few studies have been able to identify the incidence of corporate taxes on wages. We circumvent these problems by using an 11-year panel of data on 11,441 German municipalities’ tax rates, 8 percent of which change each year, linked to administrative matched employer-employee data. Consistent with our theoretical model, we find a negative effect of corporate...

in this paper modeling and forecasting of revenue of taxes in fifth development plan is investigated based on a special structure of nonlinear neural networks. the time series of taxes which are studied in this research are related to total tax, direct tax, indirect tax, companies’ tax, income tax, wealth tax, and import tax. based on the correlation dimension estimation technique, the structur...

T axpayer audits are a central feature of the voluntary compliance system in the United States Federal individual income tax. Audits are thought to have a direct deterrent effect on the individuals actually audited. In addition, audits are believed to have an indirect deterrent effect on individuals not audited, and there is some empirical evidence that suggests that changes in audit rates affe...