chapter  7
13 Pages

Income Tax Evasion and Income Distribution.

I. INTRODUCTION It is a fact that there is a considerable amount ofincome which is understated in individual income tax returns. This phenomenon, which appears to be widespread in developing and developed countries, has two serious consequencies. First, it leads to a loss in tax revenue for the Government which could otherwise be used for many constructive purposes. Secondly, it may reduce the progressivity of the tax system, thus altering the after-tax income distribution.