HKS Faculty Research Working Paper Series
HKS Working Paper No. RWP14-001
January 2014
HKS Authors
See citation below for complete author information.
Frank Plumpton Ramsey Professor of Political Economy
Abstract
The audit policy of a tax authority can signal its audit effectiveness. We model this process and show that in limited circumstances an ineffective authority can masquerade as being effective. We show that high maximal penalties imply underreporting of income.
Citation
Kotowski, Maciej, David Weisbach, and Richard Zeckhauser. "Signaling with Audits: Mimicry, Wasteful Expenditures, and Non-Compliance in a Model of Tax Enforcement." HKS Faculty Research Working Paper Series RWP14-001, January 2014.