Tax Evasion and Auditing in a Federal Economy

  • This paper analyzes the relation between tax auditing and fiscal equalization in the context of fiscal competition. We incorporate a model of tax evasion by firms into a standard tax competition framework where regional governments use their audit rates as a strategic instrument to engage in fiscal competition. We compare the region's choice of audit policies for three different cases: A scenario of unconfined competition without interregional transfers, a scenario with a gross revenue equalization (GRS) scheme and finally, a scenario with net revenue sharing (NRS), where not only the revenues from taxation but also the regions auditing costs are shared. Without regional transfers, fiscal competition leads to audit rates which are inefficiently low for revenue-maximizing governments. While in general GRS aggravates the inefficiency, NRS makes the decentralized choice of auditing policies more efficient.

Export metadata

Additional Services

Share in Twitter Search Google Scholar
Metadaten
Document Type:Article
Language:English
Author(s):Christian Traxler, Sven Stöwhase
Parent Title (English):International Tax and Public Finance
ISSN:0927-5940
Publisher:Kluwer Academic Publishers
Publication year:2005
First Page:515
Last Page:531
DOI:https://doi.org/10.1007/s10797-005-1542-0
Release Date:2017/08/02
Tag:auditing; fiscal competition; fiscal equalization; tax evasion
Volume:12
Issue:4
Licence of document (German):Metadaten / metadata
Verstanden ✔
Diese Webseite verwendet technisch erforderliche Session-Cookies. Durch die weitere Nutzung der Webseite stimmen Sie diesem zu. Unsere Datenschutzerklärung finden Sie hier.