Dynamics of tax evasion with back auditing, social norm updating, and public goods provision - An agent-based simulation

Authored by Sascha Hokamp

Date Published: 2014-02

DOI: 10.1016/j.joep.2013.01.006

Sponsors: No sponsors listed

Platforms: No platforms listed

Model Documentation: Other Narrative Mathematical description

Model Code URLs: Model code not found

Abstract

Income tax evasion dynamics and social interactions are analyzed with an agent-based model in heterogeneous populations. One novelty is the combined analysis of back auditing and ageing, which allows for incorporating psychological findings with respect to social norm updating over a taxpayer's life cycle. Another novelty concerns individual's social behavior regarding a Pareto-optimal provision of public goods. Simulation results support the counterintuitive conclusion drawn elsewhere in the literature that income tax compliance may decrease with raising marginal per capita returns (MPCRs). Yet, back auditing seems to have by far the strongest impact on the dynamics of fiscal fraud and also can help to curb the extent of tax evasion (ETE). (C) 2013 Elsevier B.V. All rights reserved.

Tags

Agent-based modeling Social norms Back auditing Heterogeneous population Income tax evasion Pareto-optimality Public goods provision