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| Author: | Chander, P. Wilde, L. L. |
| Title: | A general characterization of optimal income tax enforcement |
| Journal: | Review of Economic Studies
1998 : JAN, VOL. 65:1, p. 165-183 |
| Index terms: | INCOME TAX OPTIMIZATION TAX POLICY MORAL HAZARD |
| Language: | eng |
| Abstract: | This paper develops a general approach to characterizing optimal income tax and enforcement schemes. The results clarify the nature of interplay between tax rates, audit probabilities and penalties for misreporting. For a variety of objective functions for the principal, the optimal income tax schedule is in general concave and monotonic. The marginal payment rates determine the audit probabilities, and less harsh penalties lead to higher enforcement costs. |
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