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Title: | Audit probability versus effectiveness: The Beckerian approach revisited |
Authors: | Rablen, M |
Keywords: | Tax evasion;Tax compliance;Audit probability;Audit effectiveness;Revenue maximization;Probability weighting;Taxpayer uncertainty |
Issue Date: | 2012 |
Publisher: | Brunel University |
Citation: | Economics and Finance Working Paper, Brunel University, 12-04, Feb 2012 |
Abstract: | The Beckerian approach to tax compliance examines how a tax authority can maximize social welfare by trading-off audit probability against the fine rate on undeclared tax. This paper offers an alternative examination of the privately optimal behavior of a tax authority tasked by government to maximize expected revenue. The tax authority is able to trade-off audit probability against audit effectiveness, but takes the fine rate as fixed in the short run. I find that the tax authority's privately optimal audit strategy does not maximize vol- untary compliance, and that voluntary compliance is non-monotonic as a function of the tax authority's budget. Last, the tax authority's privately optimal effective fine rate on undeclared tax does not exceed two at interior optima. |
URI: | http://bura.brunel.ac.uk/handle/2438/7100 |
Appears in Collections: | Economics and Finance Publications Dept of Economics and Finance Research Papers |
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