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Anticorruption reforms, tax evasion, and the role of harassment
journal contribution
posted on 2019-02-01, 00:00 authored by D S Banerjee, Samarth VaidyaSamarth VaidyaWe examine the impact of anticorruption reforms on tax evasion when corruption and potentially harassment are endemic among tax auditors. We find that the threat of harassment may counterintuitively boost the impact of such anticorruption reforms on tax evasion and also eliminate corruption. Specifically, a moderate anticorruption policy can discontinuously reduce tax evasion to a level even below that under no corruption. Further strengthening of such policy can nonetheless prove counterproductive and increase tax evasion. On the contrary, in the absence of harassment, a moderate anticorruption reform induces higher tax evasion and sustenance of bribery. In this case, only a large reform can reduce tax evasion and eliminate corruption.
History
Journal
Journal of public economic theoryVolume
21Issue
1Pagination
62 - 80Publisher
WileyLocation
Chichester, Eng.Publisher DOI
ISSN
1097-3923eISSN
1467-9779Language
engPublication classification
C Journal article; C1 Refereed article in a scholarly journalCopyright notice
2018, Wiley Periodicals, Inc.Usage metrics
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