The Behavior of Tax Evaders

  • Arne Jon Isachsen
  • Sven Ove Samuelson
  • Steinar Strøm
Part of the Studies in Contemporary Economics book series (CONTEMPORARY, volume 15)

Abstract

Tax evasion in this paper manifests itself in two forms, underreporting of ordinary income and working in the hidden economy. Based on a specification of a utility function as well as on a tax function it is found, somewhat surprisingly, that an increase in the marginal tax rate in Norway reduces hours of work in the hidden economy. Underreporting of ordinary income increases as expected. The effect on total tax evasion is indeterminate. However, employing survey data and maximizing a likelihood function, an increase in the marginal tax rate turns out to have the expected positive effect both upon the supply of black labor and on under-reporting of ordinary income. This latter approach also revealed that tax evasion is a more common phenomenon among men than women, and that for both sexes hours of work in the hidden economy peak in the mid-thirties.

Keywords

Income 

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Literature

  1. BJERKHOLT, O., LONGVA, S., OLSEN, O. and STROM, S. (1983), “An analysis of supply and demand for energy: A multisectoral approach”, SOS 53, Central Bureau of Statistics, Oslo.Google Scholar
  2. ISACHSEN, A.J., KLOVLAND, J.T. and STROM, S. (1982), “The hidden economy in Norway”, in Tanzi, V. (ed.), The underground economy in the United States and abroad, Lexington.Google Scholar
  3. ISACHSEN, A.J., and STROM, S. (1984), “The size and growth of the hidden economy in Norway”, forthcoming in The Review of Income and Wealth.Google Scholar
  4. OFFERDAL, E. and STROM, S. (1982), “Unemployment, inflation and balance of trade”, Memorandum from Institute of Economics, Oslo (in Norwegian).Google Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 1985

Authors and Affiliations

  • Arne Jon Isachsen
    • 1
  • Sven Ove Samuelson
    • 2
  • Steinar Strøm
    • 2
  1. 1.Norwegian School of ManagementOsloNorway
  2. 2.Oslo UniversityNorway

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