Tax Evasion, Intrinsic Motivation, and the Evolutionary Effects of Tax Reforms

Download or read book Tax Evasion, Intrinsic Motivation, and the Evolutionary Effects of Tax Reforms written by Fabio G. Lamantia and published by . This book was released on 2017 with total page 25 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper studies tax evasion in an evolutionary setting. In addition to standard variables such as the fine they may have to pay if found guilty or the probability of being audited, individuals' inclination to engage in tax evasion may also be affected by social interactions. Individuals socially interact with other taxpayers and, doing so, they learn the payoff differential between paying and evading taxes. Moreover, expected payoffs may include reputational costs or rewards awarded by society after an individual is audited. The paper shows that (i) social norms may play a very important role in defining the long run evolution of tax evasion and, consequently, (ii) policymakers should consider reforms that would increase social awareness and information rather than more (financially and politically) expensive traditional auditing instruments; in addition, (iii) fiscal/auditing policies should be carefully tailored to the particular economic and social setting in place in a country.