Tax avoidance versus tax evasion break down

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Tax Evasion: Definition and Penalties

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Suppose that the tax rate is 30 %. Suppose also that the probability of getting caught evading taxes is 10 % plus an additional 2.5 % for every 1,000 in tax evasion. Hence, P=0.1 0.025 X, where X is the number of dollars (in thousands) of evasion. Individuals who are caught evading taxes will be forced to pay the taxes they owe in addition to a 10,000 penalty. How much evasion will a risk-neutral taxpayer engage in? How would your answer change for a risk-averse taxpayer? | Numerade

What are the effects of Tax evasion? | Shaalaa.com

Causes & Effects: Industrialization and Urbanization: Complete Lesson