WOULD TAX EVASION AND TAX AVOIDANCE UNDERMINE A NATIONAL RETAIL SALESTAX

Authors
Citation
Mn. Murray, WOULD TAX EVASION AND TAX AVOIDANCE UNDERMINE A NATIONAL RETAIL SALESTAX, National tax journal, 50(1), 1997, pp. 167-182
Citations number
51
Categorie Soggetti
Economics,"Business Finance
Journal title
ISSN journal
00280283
Volume
50
Issue
1
Year of publication
1997
Pages
167 - 182
Database
ISI
SICI code
0028-0283(1997)50:1<167:WTEATA>2.0.ZU;2-L
Abstract
A national retail sales tax has surfaced as a potential replacement fo r the current system of federal income taxation. A primary concern is that the revenue-neutral required tax rate may easily exceed 30 percen t, leading to tax base erosion through widespread avoidance and evasio n. This paper examines specific avenues for avoidance and evasion for both firms and individuals under a comprehensive national sales tax an d discusses implications for the underground economy. The analysis sho ws that opportunities for avoidance and evasion will be sustained, not eliminated, by a change in tax structure. Unfortunately lack of exper ience in administering a high-rate, indirect tax system precludes defi nitive statements regarding the likely extent of tax base erosion unde r a national sales tax.