Batabyal, Amitrajeet A.; Beladi, Hamid - In: Journal of Theoretical Politics 22 (2010) 1, pp. 123-133
We first construct a theoretical model of tax evasion in a stylized developing country in which all taxpayers have either high or low income. The key problem is that the high-income taxpayers may underreport their income. An individual income tax return can only be verified with an audit that...