SFB 303 Discussion Paper No. A - 142
Author: Cowell, Frank, A. and James P. F. Gordon
Title: Unwillingness to Pay: Tax Evasion and Public Good Provision
Abstract: We e examine the effect of random tax enforcement in a simplified model of public goods supply.
Individuals who might actually like an increase in the public good supply at the expense of their own private
consumption will, nevertheless, want to opt out of paying their share of the required taxes, but if they evade
some portion of their taxes they may be caught and penalised. The responsiveness of taxpayers to tax and
enforcement parameters is shown to depend critically on the extent of provision of publicly supplied goods and
the "publicness" of these goods in terms of their non-excludability. In particular the model has interesting
implications for the effects on the size of the black economy, of the size of the public sector, the type of public
good supplied, and the degree of conformity between taxpayers.
Creation-Date: November 1987
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