New research: Distributional Implications of Joint Tax Evasion

The paper "Distributional Implications of Joint Tax Evasion" was published in The Economic Journal. The paper is written by OFS affiliates Odd E. Nygård, Joel Slemrod and Thor O. Thoresen. Joel Slemrod is the Director of the Office of Tax Policy Research Paul W. McCracken Collegiate Professor of Business Economics and Public Policy Professor of Economics. Odd E. Nygård and Thor O. Thoresen are researchers at Statistics Norway.

Abstract

Both buyers and sellers of goods and services may benefit from letting their economic transactions go unrecorded for tax purposes. The supplier reduces his tax burden by underreporting income and sales, whereas the consumer may gain from buying a non‐taxed lower‐priced product. The distributional implications of such joint tax evasion depend on the amounts evaded, on where the evaders on both sides of the market are found in the income distribution, and on how the financial gain is split. Our empirical investigations show that the tax evasion‐controlled estimate of income inequality in Norway exhibits more income dispersion than official estimates.

Published May 21, 2018 12:00 PM - Last modified Oct. 15, 2018 9:08 AM