TY  - JOUR
AU  - Wolf,Holger C.
TI  - Anti-Tax Revolutions and Symbolic Prosecutions
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4337
PY  - 1993
Y2  - April 1993
UR  - http://www.nber.org/papers/w4337
L1  - http://www.nber.org/papers/w4337.pdf
N1  - Author contact info:
Holger C. Wolf
Center for German and European Studies
ICC-503
School of Foreign Service
Georgetown University
Washington, DC  20057
Tel: 202/687-8079
Fax: 202/687-8359
E-Mail: moneyhist@aol.com
AB  - We extend the traditional tax evasion model to take account of the interaction between individual compliance decisions and perceived detection probabilities. The generalization provides a rationale for "anti-tax revolutions" characterized by a sudden shift of a significant fraction of the tax paying citizenry from compliance to tax evasion with unchanged fundamentals and monitoring rules. We establish, with an application to hyperinflation, the possibility of multiple compliance equilibria with lock-in effects. Finally, we demonstrate the potential cost effectiveness of "symbolic prosecution" as an equilibrium shifting device in preference to permanent changes the monitoring process.
ER  -