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Title: | Audit probability versus effectiveness: The Beckerian approach revisited |
Authors: | Rablen, MD |
Keywords: | Tax evasion;Tax compliance;Audit probability;Audit effectiveness;Reveneu maximization;Probability weighting;Taxpayer uncertainty |
Issue Date: | 2014 |
Publisher: | Wiley |
Citation: | Journal of Public Economic Theory, 16(2), 322 - 342, 2014 |
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 voluntary compliance, and that voluntary compliance is nonmonotonic as a function of the tax authority's budget. Finally, the tax authority's privately optimal effective fine rate on undeclared tax does not exceed two at interior optima. |
Description: | This is the accepted version of the following article: RABLEN, M. D. (2014), Audit Probability versus Effectiveness: The Beckerian Approach Revisited. Journal of Public Economic Theory, 16: 322–342, which has been published in final form at http://onlinelibrary.wiley.com/doi/10.1111/jpet.12062/abstract. |
URI: | http://onlinelibrary.wiley.com/doi/10.1111/jpet.12062/abstract http://bura.brunel.ac.uk/handle/2438/9050 |
DOI: | http://dx.doi.org/10.1111/jpet.12062 |
ISSN: | 1097-3923 |
Appears in Collections: | Economics and Finance Dept of Economics and Finance Research Papers |
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