Luca Piccoli (University of the Balearic Islands)on "Tax evasion and the optimal non-linear labour income taxation"

Speaker:  Luca Piccoli - University of the Balearic Islands
  Wednesday, April 1, 2015 at 12:30 PM Aula C, Palazzo di Economia
The present work studies optimal taxation of labour income when taxpayers are allowed to evade taxes. The analysis is conducted within a general non-linear tax framework, providing a characterisation of the solution for risk-neutral and risk-averse agents. For risk-neutral agents the optimal government choice is to enforce no evasion and to apply the original Mirrlees' rule for the optimal tax schedule. The no evasion condition is precisely determined by a combination of a sufficiently large penalty and a constant auditing probability. Similar results hold for risk-averse agents. Our findings imply that a government aiming at maximizing social welfare should always enforce no evasion and provide simple rules to pursue this objective. (The paper can be found at

Programme Director
Marcella Veronesi

External reference
Marcella Veronesi

Publication date
January 28, 2015