TY  - JOUR
AU  - Fullerton,Don
AU  - Karayannis,Marios
TI  - Tax Evasion and the Allocation of Capital
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4581
PY  - 1993
Y2  - December 1993
UR  - http://www.nber.org/papers/w4581
L1  - http://www.nber.org/papers/w4581.pdf
N1  - Author contact info:
Don Fullerton
Department of Finance
University of Illinois
BIF Box#30 (MC520)
515 East Gregory Drive
Champaign, IL  61820
Tel: 217/244-3621
Fax: 217/244-3102
E-Mail: dfullert@illinois.edu
AB  - The efficiency cost of capital misallocations between the corporate sector and the noncorporate sector is typically measured using statutory tax differences.  Corporate-source income tax compliance is high because of third party reporting, however, while noncorporate rental income tax compliance is low.  Differential evasion thus exacerbates statutory differences and enlarges the efficiency cost.  To measure this effect, we build a numerical general equilibrium model where households simultaneously choose portfolios of risky assets and fractions of income to report.
ER  -