Tax+evasion

Tax evasion

Tax evasion is an activity where you, in a legal way, try to decrease the taxation on you total revenues. It has been seen as a way to invest, it has a degree of risk and uncertainty just as any other investment. Taxpayers weights the pros and cons of evasion, the chance to get detected and the penalties related to tax avoidance. Taxpayers weigh the benefits and costs of evasion in isolation from other influences, with costs determined mainly by the chance of detection and financial penalties.

Tax evasion and shadow economy
In comparison to activities within the shadow economy, the penalties for tax evasion “crimes” are often punished with fines rather than jail . Pure tax evasion is to been seen as the financial transactions that are made to cover your revenues, often via account in different tax havens, furthermore increase you capital income and decrease the taxation. During a few years the shadow economy is a quite popular subject, the last recession, has also a great impact on the interest of shadow economy. A recession pushing countries into deep deficits increases the revenue within the shadow economy. With a recession comes higher taxes or other government revenues to compensate for the resulting increase in public debt, also there the risk that decision taken by the decision makers are made based on unreliable indicators, which are appearing in an volatile economy.

Patterns and behavior
A common pattern within tax evasion is that when the tax rates goes up, the taxpayers fails in reporting in their total income. As governments decisions can affect the economy and will to pay taxes. By allocating the revenues in to different parts they will affect both supply- and demand side of the economy or one another. The tax morality is a person obligation to pay taxes, you it as your duty to contribute to society. Of course this is depending on what you get back from society. The relationship between tax morality and corruption within governance is obvious. With an increasing corruption the willingness to pay taxes decreases, and of course there are several other aspects that affects the tax morality.

At the moment experts within this area is are questioning earlier theories to explain tax evasion, this since there is a growing concern regarding the issue that tax evasion is increasing. No matter what the governments work to increase work, revenue and profit within the official economy is a benefit for society.