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Title: Optimal income tax enforcement under prospect theory
Author: Piolatto, Amedeo
Trotin, Gwenola
Keywords: Frau fiscal
Frau de llei
Impostos sobre la renda
Control de gestió
Tax evasion
Evasion of the law
Income tax
Management audit
Issue Date: Feb-2016
Publisher: Wiley
Abstract: Prospect Theory (PT) has become the most accepted alternative to Expected Utility Theory (EUT) as a theory of decision under uncertainty. This paper extends the existing literature on efficient tax and audit schemes, by answering the question as to just how progressive an efficient tax system can be when assuming that taxpayers behave in line with the tenets of PT. Under reasonable assumptions regarding the reference income and the value function of taxpayers, we show that the efficient tax schedule is regressive while audit probabilities are non-increasing in the declared income. These results are consistent with the previous literature on EUT
Note: Versió postprint del document publicat a:
It is part of: Journal of Public Economic Theory, 2016, vol. 18, num. 1, p. 29-41
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ISSN: 1097-3923
Appears in Collections:Articles publicats en revistes (Economia)

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