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| Author: | Bayer, R. |
| Title: | A contest with the taxman: the impact of tax rates on tax evasion and wastefully invested resources |
| Journal: | European Economic Review
2006 : JUL, VOL. 50:5, p. 1071-1104 |
| Index terms: | agency theory moral hazard tax audits tax evasion taxation |
| Language: | eng |
| Abstract: | This article examines the impact of tax rates on tax evasion and wastefully invested resources by developing an auditing moral hazard model where both the principal and the agent can influence the probability that the true state of nature is verified. This framework can also be used to study tax evasion. The authors find that higher tax rates cause more tax evasion and increase the resources wasted in the contest between the taxpayer and the authority. |
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