International evidence of tax evasion: Graetz, Reinganum and Wilde model approach
DOI:
https://doi.org/10.1590/0101-41614732fcvKeywords:
Tax Evasion, Game Theory, International EvidencesAbstract
We propose to parameterize Graetz, Reinganun and Wilde’s seminal model (1986) for two countries groups: G1 with low tax evasion and G2 with high tax evasion. Based on data from 16 countries, we find a strong correlation between tax burden, inspecting cost and countries’ tax evasion. Fine seems to have lack of effectiveness in mitigation of evasion. Our results have implications for both research and practice. This is the first study to parametrize Graetz, Reinganun and Wilde’s model as an explanator of international tax evasion diversity and serves as the starting point for the development of an international tax compliance framework. Thus, policies that review the countries’ tax structure and modernize regulatory agencies to reduce their costs may have positive effects on tax evasion.
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