Ricerc@Sapienza

This paper examines the compliance behaviour of a taxpayer endowed with a stochastic income, taking into account dynamical factors as public and private investments, within a stochastic control framework. Assuming logarithmic utilities and thanks to a suitable rewrite of the problem, we provide an existence and uniqueness result for the solution of the Hamilton–Jacobi–Bellman equation associated to the control problem, and we rely on a symbolic and numerical algorithm to study its solution.

Tax evasion is a matter of huge concern for all countries as it undermines the public finance and can lead to a very inefficient resource allocation. Therefore it is of great interest to develop models that can help targeting the units (firms or individuals) at risk of noncompliance. Our focus is on a particular facet of tax evasion: undeclared work. We use an ad hoc data set by linking information on the inspections carried out in Italy in 2005 by the National Institute of Social Security on building and construction companies and a vast set of firms characteristics.

This paper studies the effect of income inequality on tax evasion. To discuss the topic, we present a simple model, based on Benabou and Tirole [6], that incorporates incentives for tax compliance such as punishment and fines, intrinsic motivation and social norms. Since we consider a regressive system of incentives to comply, income inequality increases the value of tax evasion although overall propensity to comply is unaffected. In this framework, we consider the hypothesis that social norms are group specific as in the case of social segregation or status related networks.