Theoretical effects of ambiguity on tax evasion: is unclarity beneficial to tax compliance?
ENS Paris-Saclay, Research Project, 2016
This paper reviews the behavior of tax evader when they face ambiguity about the probability of audit. Therefore it uses the smooth ambiguity model of Klibanoff Marinacci & Mukerji(2005). Then it introduces inequity in this framework. Concerning ambiguity averse agents, this work reveals that ambiguity about the probability of audit appears to be efficient to reduce the evaded amount of income. Then inequity by decreasing the global wealth of agent, tends to decrease the evaded amount of taxes.Taking the behavior of agents into account, we deduce what the optimal fiscal policy is. As most of people are risk and ambiguity averse, the State should implement ambiguity around the probability of audit. Then a numerical example is derived so as to obtain more accurate and realistic conclusions.