Firm-level determinants of tax evasion in transition economies

Business tax evasion is an important issue for governments. Yet the factors that determine business tax evasion have not been sufficiently examined in the literature in general, and in transition contexts in particular. To address this gap, this study uses the WB/EBRD Business Environment and Enterprise Performance Survey (BEEPS) database with a sample of over 12,692 firms from 26 transition economies. Applying various modelling strategies, we argue that tax evasion is a function of firm-level and institutional-level variables. We contribute to the literature by providing robust evidence showing that the perceived tax burden has a positive impact on tax evasion. We also find that the tax evasive behaviour of firms is positively influenced by low trust in government and in the judicial system as well as by higher perceptions of corruption and higher compliance costs. We find that smaller firms, individual businesses and firms in sectors that are less visible to the tax administration are more likely to get involved in evasive behaviour. Overall, institutional factors play an important role in determining firms’ tax evasion behaviour in transition economies. This finding has important policy implications.     

The incidence and persistence of corruption in economic development

Economic development and bureaucratic corruption are determined jointly in a dynamic general equilibrium model of growth, bribery and tax evasion. Corruption arises from the incentives of public and private agents to conspire in the concealment of information from the government. These incentives depend on aggregate economic activity which, in turn, depends on the incidence of corruption. The model produces multiple development regimes, transition between which may or may not occur. In accordance with recent empirical evidence, the relationship between corruption and development is predicted to be negative.     

浅谈刑法偷税罪的修订及其对税收工作的影响

《刑法修正案(七)》对刑法第201条偷税罪作了重大修改。从我国的法律看,刑法修订往往早于税法的修订,两者关于偷税违法行为和犯罪的界定上又具有很强的接续性。     

THE ECONOMICS OF TAXPAYER COMPLIANCE

Abstract. There is a great deal of evidence to suggest that tax evasion is now fairly extensive throughout Western Europe and North America. Academic economists have shown considerable interest in various aspects of tax evasion. In this article we examine the literature on two particular issues. First, why do individuals evade their tax obligations and second, what policies should governments pursue in attempting to reduce or eliminate evasion? We concentrate on income tax evasion which has been the major preoccupation in the literature. We first show that the compliance costs of income tax evasion are quite substantial. We then examine theoretical attempts to model individual taxpayers behaviour. Here we find that it is extremely difficult to make unambiguous predictions concerning the effects of changes in important variables, such as income tax rates. Next, we review the empirical ‘evidence’ obtained from (i) attitudinal surveys, (ii) tax games, and (iii) econometric analysis of individuals’ tax returns. All of these studies are found to be flawed in certain major respects. Finally, we consider a number of policy options available to tax authorities. Given the difficulty of determining a socially optimal level of evasion, governments are likely to pursue suboptimal policies aimed at entirely eliminating tax evasion. However, even here there is considerable disagreement about the design of an efficient policy.     

Assessing the impact of individual and context factors on the entrepreneurial process. A cross-country multilevel approach

This paper attempts to fill the gap on the existing entrepreneurship literature by empirically testing the influence of two groups of individual-level factors (socio-economic, demographic and perceptual characteristics) and two groups of country-level factors (both formal and informal institutional measures and macroeconomic variables) on three stages of the entrepreneurial process. We analyze the interplay between individual and context factors in nascent, young and established entrepreneurs across 49 different countries, mixing data from different sources and applying multilevel binary logistic regression models. Our results show that entrepreneurial activities are male headed, irrespectively of the entrepreneurial stage of their activities, and that highly-educated entrepreneurs are more oriented to start up new ventures. The existence of a wider network of people involved in entrepreneurship contributes to updating information on new markets and opportunities, leading to a more accurate entrepreneurial decision. The level of development of a country constitutes an important determinant of entrepreneurship but also moderates the relationship between entrepreneurship and institutional factors. In more developed countries, individual characteristics may be still determinant factors shaping the decision to become an entrepreneur, although their magnitude may depend on the stage of the entrepreneurial process. Finally, the key to entrepreneurship for both more and less developed countries seems to be their fiscal systems: a fair tax system that actively fights tax evasion and corruption seems to be essential to reducing the economic pressure associated with the creation and survival of ventures.

     

Analysing tax evasion dynamics via the Ising model

We develop a model of tax evasion based on the Ising model. We augment the model using an appropriate enforcement mechanism that may allow policy makers to curb tax evasion. With a certain probability tax evaders are subject to an audit. If they get caught they behave honestly for a certain number of periods. Simulating the model for a range of parameter combinations, we show that tax evasion may be controlled effectively by using punishment as an enforcement mechanism.     

浅析会计制度对企业所得税税收筹划的影响

税收筹划是指纳税人在税法规定许可的范围内,通过对经营、投资、理财活动的事先筹划和安排,尽可能地取得节约税收或成本的税收收益。税收筹划应具备"三性"合法性、筹划性和目地性。对于"偷税",世界各国认识较一致,面对"避税"和"税收筹划",又有区别。前者虽然不违法,但属于钻税法的空子,有悖于国家的税收政策导向,后者是完全合法的,甚至是税收政策予以引导和鼓励的。     

New and Current Evidence on Determinants of Aggregate Federal Personal Income Tax Evasion in the United States

Using the most current data available, this study seeks to identify any new as well as traditional determinants of personal income tax evasion. A variety of empirical estimates find that income tax rates, the IRS audit rate and IRS penalty interest rates, and the unemployment rate all influence tax evasion. In addition, rarely investigated variables including the tax‐free interest rate, the public's job approval rating of the president, and the public's dissatisfaction with government, along with previously unstudied variables, namely, the real interest rate yield on Moody's Baa‐rated long‐term corporate bonds and the real interest rate yield on three‐year Treasury notes, also affect income tax evasion.     

Distributional implications of informal economy in the EU countries: Accounting for the spread of tax evasion benefits and cultural characteristics

This study provides evidence about the impact of informal economy on income inequality by using annual cross-country panel data from 28 European Union countries observed during the period 2005–2017. Particular attention is dedicated to the cultural setting which is expected to impact taxpayers’ behaviour and thereby income distribution. The study reveals a relationship between the size of the underground economy and income inequality, which is negative when approaching domestic informality and positive when international tax evasion by individuals is related to the top-bottom income disparity. Moreover, a delay of one-year is needed for these effects to occur, sustaining the hypothesis of secondary consequences of the informality. The study also shows that a set of cultural peculiarities are relevant for the nexus of international tax evasion by individuals and income polarisation. The inequality enhancing effect of the offshore activities is larger in countries with high degree of uncertainty avoidance and power distance, and low level of indulgence and long-term orientation respectively.     

Mathematical models describing the effects of different tax evasion behaviors

Microscopic models describing a whole of economic interactions in a closed society are considered. The presence of a tax system combined with a redistribution process is taken into account, as well as the occurrence of tax evasion. In particular, the existence is postulated, in relation to the level of evasion, of different individual taxpayer behaviors. The effects of the mentioned different behaviors on shape and features of the emerging income distribution profile are investigated qualitatively and quantitatively. Numerical solutions show that the Gini inequality index of the total population increases when the evasion level is higher, but does not depend significantly on the evasion spread. For fixed spread, the relative difference between the average incomes of the worst evaders and honest taxpayers increases approximately as a quadratic function of the evasion level.     

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 some modifications: 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 subsistence consumption level is higher than a given threshold. In the latter case the relationship is usually negative , but the value of elasticity depends on the form of absolute risk aversion. In particular we show that for increasing relative risk aversion, for a tax rate higher than 50%, the elasticity may even become positive. US data are consistent with IRRA preferences.     

Corruption: Theory and evidence from the Russian Federation

In this paper, we provide theory and evidence on the problem of corruption in the Russian Federation. Our theoretical model indicates that in the presence of official corruption, the numbers of tax inspection (collection) employees could be inversely related to per capita tax collection. Our empirical analysis supports our theoretical model, shedding light on one of the most intractable problems in the Russian Federation.     

A quantitative view on policymakers’ goal,institutions and tax evasion

We develop a general theoretical model to compare two different policymakers both facing tax evasion. Policymakers differs in that they aim to maximize either the fiscal revenues ( $T$ ) as in a social-democracy as, e.g., Sweden, or the GDP as in a capitalistic country as, e.g., the USA. Both Bureaus can manoeuvre the tax rate and the share of tax receipts spent to fight the tax evasion rather than to increase the public capital. Our model merges the indications of two distinct, and sometimes conflicting, approaches to the analysis of tax evasion in that reconciling them. We also find that the feedbacks between the private and public sector are linked to some Laffer-type relationships usually unexplored by the existing literature. As compared to capitalistic systems, then, our results show that social-democracies end up imposing higher tax rates and, possibly, more pervasive regulations. Consequently, they are likely to suffer from larger tax-evasion-to-GDP ratios. This notwithstanding, social-democracies spend relatively more to contrast tax dodgers. On the other hand, $T$ -maximizing governments have better institutional settings and greater employment rates. Whichever the preferred target, however, no policymaker is able to erase totally the tax evasion, which may explain why this latter is so pervasive and persistent even among the richest countries.     

基于博弈论的个人所得税逃税行为分析

在我国,由于税制不健全、征管水平比较低以及纳税人依法纳税意识淡薄,个人所得税的逃税问题更是极为严重,给国家经济秩序和税法体制造成了很大的危害。通过建立个人所得税税收稽查博弈模型,分析影响个人所得税纳税人逃税行为选择的因素,以期能对我国税收征管制度的完善提供理论依据。     

土地增值税税收流失风险的防范机制研究——来自广东省汕头市地方税务局的征管经验

房地产税收流失风险是税务管理的重点和难点。在研究现行土地增值税征管模式的基本特征及存在问题的基础上,汕头市地方税务局引进风险管理机制,对土地增值税的管理由事后管理向事前和事中管理转变。探索出"前馈控税、项目管理、信息比对、模型构建"的土地增值税收流失的风险防范机制。并据此提出了一些政策建议。     

Why is there so little tax coordination? The role of majority voting and international tax evasion

It is a striking feature of EU tax policy that countries find it difficult to agree on capital tax coordination. This is in conflict with the prevailing theoretical view, according to which tax coordination is beneficial. This paper develops a political economy argument which may help to explain this puzzle. We consider a model of tax competition where fiscal policy decisions are taken via majority voting and tax evasion is possible but costly. It turns out that tax coordination agreements may fail to generate political support because middle income groups may lose from tax coordination, even if their capital income is below average.     

APPLICATIONS OF BEHAVIOURAL ECONOMICS TO TAX EVASION

The paper reviews recent models that have applied the techniques of behavioural economics to the analysis of the tax compliance choice of an individual taxpayer. The construction of these models is motivated by the failure of the Yitzhaki version of the Allingham–Sandmo model to predict correctly the proportion of taxpayers who will evade and the effect of an increase in the tax rate upon the chosen level of evasion. Recent approaches have applied non‐expected utility theory to the compliance decision and have addressed social interaction. The models we describe are able to match the observed extent of evasion and correctly predict the tax effect but do not have the parsimony or precision of the Yitzhaki model.     

Does Tax Evasion Affect Occupational Choice?*

This paper presents a novel micro‐econometric procedure that identifies the extent to which occupational choices are distorted by opportunities for tax evasion. Previous studies claim to have found significant and substantial effects, but analysis and replication of their methods reveals that they generate conflicting and misleading results. The paper then implements the new procedure using several British micro‐data sets. A thorough empirical investigation reveals that occupational choice between self‐employment and paid employment is not robustly related to pecuniary factors in general, and is invariant to tax avoidance and evasion opportunities in particular.     

PRESUMPTIVE TAXATION METHODS: A REVIEW OF THE EMPIRICAL LITERATURE

This paper reviews the empirical literature studying the effect of the introduction of presumptive taxation methods on taxpayers’ behavior. Although the concept of presumptive taxation entails numerous alternative methods to determine tax liabilities, I survey two main areas of the literature: indirect tax assessment methods and presumptive minimum taxes. The review investigates efficiency and equity implications of presumptive taxation methods. Conflicting conclusions emerge about the effectiveness of presumptive policy tools in achieving different goals, such as the increase of voluntary tax compliance, the growth of tax revenues, and the reduction of shadow economy and fiscal evasion.     

Exploring tax evasion in the context of political uncertainty

We present a model of agents facing the uncertainty of two future forms of government who are able to insure against this uncertainty by hiding funds from taxation. In order to choose whether or not to hide funds from taxation, agents need to know policy choices that each government would make should it come to power. But each government, before it could make its decision, would need to know the choices of the agents who would, for example, produce tax revenues. This informational tension is resolved endogenously. We derive the resulting level of tax evasion in society and the optimal choices made by the potential governments. We examine how changes in governmental structure would affect the level of tax evasion, and how that, in turn, would affect a particular form of capital flight.