Distributional Implications of Joint Tax Evasion

36 Pages Posted: 22 Jun 2016

See all articles by Odd E. Nygard

Odd E. Nygard

Statistics Norway

Joel B. Slemrod

University of Michigan, Stephen M. Ross School of Business; National Bureau of Economic Research (NBER)

Thor O. Thoresen

Statistics Norway - Research Department; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: May 30, 2016

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, whereas the consumer gains 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 how the financial gain is split between the suppliers and demanders. We use various data sources to identify tax evasion among sellers and buyers of goods and services. Results clearly suggest that the tax-evasion-controlled estimate of income inequality in Norway exhibits more income dispersion than official estimates.

Keywords: tax evasion, income inequality, expenditure approach

JEL Classification: D310, D630, H260

Suggested Citation

Nygard, Odd E. and Slemrod, Joel B. and Thoresen, Thor O., Distributional Implications of Joint Tax Evasion (May 30, 2016). CESifo Working Paper Series No. 5915. Available at SSRN: https://ssrn.com/abstract=2798601

Odd E. Nygard (Contact Author)

Statistics Norway ( email )

N-0033 Oslo
Norway

Joel B. Slemrod

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Room R5396
Ann Arbor, MI 48109-1234
United States
734-936-3914 (Phone)
734-763-4032 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Thor O. Thoresen

Statistics Norway - Research Department ( email )

Kongens Gt. 6
PO Box 8131 Dep
N-0033 Oslo
Norway

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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