A FAIRNESS APPROACH TO INCOME-TAX EVASION

The tax that a taxpayer wishes to evade is determined on the basis of his perception of the fairness of his fiscal treatment, with respect to both governmental supply of public goods and the perceived behaviour of other taxpayers. The coercive powers of the State and the taxpayer's attitude toward risk determine the extent to which this desired level is undertaken in practice. This approach is able to produce implications for the relationship between public expenditure, tax rates and tax evasion which are more consistent with empirical evidence than the results of the conventional portfolio choice approach.