Tax Evasion Indices and Profiles

Abstract

The aim of this article is to adapt definitions and tools currently used in the economic literature on poverty to individual data on tax evasion. The article presents composite indices and profiles of tax evasion based on the three I’s of tax evasion: incidence, intensity, and inequality, following the approach of Shorrocks’s study and Jenkins and Lambert’s study that proposed the three I’s of poverty. In the field of tax evasion, one stream of literature produces a potentially large amount of individual microdata using tax benefit and agent-based models: the article enriches the analysis offered by these models with indices that take into account the entire distribution of taxpayer evasion rates. Particularly, the article presents a new composite index of tax evasion that incorporates a concentration index of individual tax evasion rates. A final section shows a sensitivity analysis of tax evasion indices and profiles through numerical simulations.