Intertemporal Resource Allocation and Income Tax Evasion Intertemporal Resource Allocation and Income Tax Evasion

Intertemporal Resource Allocation and Income Tax Evasion The discrimination again a saving, in favour of present consumption, due to the income tar has been studied, at least, since the late thirties and was mentioned by John Stuart Mill more than a century ago. This paper is concerned with the effect of evading such a tax on the discrimination against savings and capital accumulation. In particular, we want to study a situation in which the probability of detecting an evader is an increasing function of his accumulated evasion in the past. This is consistent with the tax authorities being stricter in the control of taxpayers with a relatively high net wealth, with respect lo the incomes declared.