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Tax amnesties and the self-selection of risk-averse taxpayers

European Journal of Law and Economics, ISSN: 0929-1261, Vol: 18, Issue: 3, Page: 319-341
2004
  • 3
    Citations
  • 0
    Usage
  • 19
    Captures
  • 0
    Mentions
  • 0
    Social Media
Metric Options:   Counts1 Year3 Year

Metrics Details

  • Citations
    3
    • Citation Indexes
      3
      • Academic Citation Index (ACI) - airiti
        1
      • CrossRef
        1
  • Captures
    19

Review Description

In this paper we model taxpayers participation in an unexpected tax amnesty, which can be entered by paying a fixed amount. Taxpayers are characterized by a Constant Relative Risk Aversion (CRRA) utility function and differ in relative risk aversion coefficient and in income. We show that amnesties may fail as a self-selective device to fully separate big from small evaders and to extract resources from the former. Only taxpayers whose relative risk aversion falls within a given interval participate, while those whose evasion is too small or too large do not enter. The model is used to estimate relative risk aversion and tax evasion of participants in 1991 and 1994 Italian income tax amnesties. © 2004 Kluwer Academic Publishers.

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