Abstract
t We consider a model where agents can invest money at home and abroad. Their total income comprises interest income from these investments and labor income. Tax on interest income can be evaded — at the risk of being detected and fined. We analyze the optimal portfolio and tax evading decisions of agents with different incomes. In a second step, we scrutinize the optimal government policy. Using different instruments government tries to maximize total tax receipts and to prevent flight of capital as far as possible.
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© 2001 Springer-Verlag Berlin Heidelberg
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Tillmann, G. (2001). Evasion of Tax on Interest Income in a Two-Country Model. In: Debreu, G., Neuefeind, W., Trockel, W. (eds) Economics Essays. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-04623-4_21
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DOI: https://doi.org/10.1007/978-3-662-04623-4_21
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-642-07539-1
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