We model the optimal intertemporal decision of an agent who chooses tax evasion and consumption, over an infinite lifetime horizon, where consumption is driven by habits. We find the following: (i) tax evaders reduce consumption in the early stages of habit accumulation and increase it over time; (ii) habit formation has a dampening effect on tax evasion; (iii) neglecting tax evasion can lead to habit overestimation; (iv) the effect of the tax rate on tax evasion is ambiguous; (v) heavy fines are more efficient than frequent controls in reducing tax evasion.
Bernasconi, Michele (Corresponding)
|Data di pubblicazione:||2020|
|Titolo:||Dynamic Tax Evasion with Habit Formation in Consumption|
|Rivista:||SCANDINAVIAN JOURNAL OF ECONOMICS|
|Digital Object Identifier (DOI):||http://dx.doi.org/10.1111/sjoe.12365|
|Appare nelle tipologie:||2.1 Articolo su rivista |