The Microeconomic Models of Tax Evasion, Tax Avoidance and Tax Denial – What Does the Profession State?

Abstract

There are several economic models in professional literature that seek to correlate between human behavior patterns, attitudes, tax evasion and their risk, and their institutional background. Among the theoretical models of tax behavior, the pioneer Allingham-Sandmo (1972) model further developed model of Becker (1968, 1976). Corchòn (1992) describes the coexistence norms of economic operators, the game of the ’cops and robbers’ of a citizen attempting to escape from the taxing state and its obligations. Ehrlich's model (Ehrlich 1973) - a choice between a curve and a straight path - that legitim activities provide stability and constancy, while more illegal activity may result in greater income. In my paper, I review international experiences that show that reducing the tax burden alone does not reduce the size of the hidden economy, in the long run; only improving the autonomy and motivation of actors can bring lasting results.