Anti-Tax Revolutions and Symbolic Prosecutions

13 Pages Posted: 28 Dec 2006

See all articles by Holger C. Wolf

Holger C. Wolf

Georgetown University - Edmund A. Walsh School of Foreign Service (SFS)

Date Written: April 1993

Abstract

We extend the traditional tax evasion model to take account of the interaction between individual compliance decisions and perceived detection probabilities. The generalization provides a rationale for "anti-tax revolutions" characterized by a sudden shift of a significant fraction of the tax paying citizenry from compliance to tax evasion with unchanged fundamentals and monitoring rules. We establish, with an application to hyperinflation, the possibility of multiple compliance equilibria with lock-in effects. Finally, we demonstrate the potential cost effectiveness of "symbolic prosecution" as an equilibrium shifting device in preference to permanent changes the monitoring process.

Suggested Citation

Wolf, Holger C., Anti-Tax Revolutions and Symbolic Prosecutions (April 1993). NBER Working Paper No. w4337. Available at SSRN: https://ssrn.com/abstract=478737

Holger C. Wolf (Contact Author)

Georgetown University - Edmund A. Walsh School of Foreign Service (SFS) ( email )

Washington, DC 20057
United States
202-687-8079 (Phone)
202-687-8359 (Fax)

HOME PAGE: http://georgetown.edu/faculty/wolfhc/

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