Itemised Deductions: A Device to Reduce Tax Evasion
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Amedeo Piolatto
Abstract
With direct incentives and sanctions being the most common instruments to fight tax evasion, the theoretical literature has tended to overlook indirect schemes, such as itemised deductions, in which one agent’s behaviour affects the likelihood that others will declare their revenue. Itemised deductions provide an incentive for consumers to declare their purchases. This induces a partial shift in the demand from the black market to the legal one, for consumers need a transaction receipt to enjoy the tax deduction. I show that it is possible to increase tax proceeds by choosing a suitable level of itemised deduction, and this, for any level of taxation. Indeed, the cost for the tax authority on the consumers’ side is more than compensated for by the extra proceeds generated on the sellers’ side.
© 2019 by Walter de Gruyter Berlin/Boston
Articles in the same Issue
- Economic Factors of Victimization: Evidence from Germany
- Tax Competition, Investment Irreversibility and the Provision of Public Goods
- Itemised Deductions: A Device to Reduce Tax Evasion
- Risk-Off Episodes and Swiss Franc Appreciation: The Role of Capital Flows
- A Crook is a Crook . . . But is He Still a Crook Abroad? On the Effect of Immigration on Destination-Country Corruption
- Another Look at the Equity Risk Premium Puzzle
- Acknowledgements
- Index: Volume 16, 2015
Articles in the same Issue
- Economic Factors of Victimization: Evidence from Germany
- Tax Competition, Investment Irreversibility and the Provision of Public Goods
- Itemised Deductions: A Device to Reduce Tax Evasion
- Risk-Off Episodes and Swiss Franc Appreciation: The Role of Capital Flows
- A Crook is a Crook . . . But is He Still a Crook Abroad? On the Effect of Immigration on Destination-Country Corruption
- Another Look at the Equity Risk Premium Puzzle
- Acknowledgements
- Index: Volume 16, 2015
