The Effect of Economic Freedom on Tax Evasion and Social Welfare: An Empirical Evidence

Year 2018, Volume: 25 Issue: 1, 1 - 13, 27.04.2018

Ahmet Tekin , Taner Güney , Ersin Nail Sağdıç

https://doi.org/10.18657/yonveek.299237

Cited By: 6

Abstract

This
study is to examine the effect of economic freedom on tax evasion and social
welfare for 63 countries by using multi-regression method. The findings
indicate that economic freedom and tax evasion have a statistically significant
and negative correlation, whereas economic freedom and social welfare have a
meaningful and positive correlation. Accordingly, enhancing economic freedom
causes an increase in social welfare, and prevents tax evasion.

Keywords

Economic Freedom, Welfare, Tax Evasion, taxation

Ekonomik Özgürlüğün Vergi Kaçakçılığı ve Sosyal Refah Üzerine Etkisi

Abstract

Bu
çalışmada ekonomik özgürlüğün vergi kaçakçılığı ve sosyal refah düzeyi
üzerindeki etkisi 63 ülke verisiyle çoklu regresyon modeli kullanılarak
incelenmiştir. Analiz sonuçlarından elde edilen bulgulara göre, ekonomik
özgürlük ile vergi kaçakçılığı arasında istatistiksel olarak anlamlı ve negatif
yönlü bir ilişki varken, ekonomik özgürlük ile sosyal refah arasında
istatistiksel olarak olarak anlamlı ve pozitif yönlü bir ilişki vardır.
Ekonomik özgürlüğün vergi kaçakçılığını önleme ve sosyal refahı artırmadaki
önemini ortaya koyan bu çalışmanın sonuçlarına göre, ekonomik özgürlüklerin
artmasının vergi kaçakçılığını önlediği, tam tersine sosyal refah düzeyini ise
artırdığı tespit edilmiştir.

Keywords

Ekonomik Özgürlük, Sosyal Refah, Vergi Kaçakçılığı

References

• Cebula, R. J., Feige, L. F. (2012). America’s unreported economy: measuring the size, growth and determinants of income tax evasion in the U.S. Crime, Law and Social Change, 57(3): 265–285.
• Clotfelter, C. T. (1983). Tax Evasion and Tax Rates: An Analysis of Individual Returns, The Review of Economics and Statistics, 65(3): 363-373.
• Cobham, A. (2005). Tax evasion, tax avoidance, and development finance, Queen Elisabeth Working House, Working Paper No. 129:1-20.
• Djankov, S., Ganser, T., McLiesh, C., Ramalho, R. and A. Shleifer (2010), The Effect of Corporate Taxes on Investment and Entrepreneurship, American Economic Journal: Macroeconomics, 2:31–64.
• Dreher, A., Schneider, F. (2010). Corruption and the shadow economy: an empirical analysis, Public Choice, 144:215-238.
• Esposto, A. G., Zaleski, P. A. (1999). Economic Freedom and the Quality of Life: An Empirical Analysis, Constitutional Political Economy, 10:185-197.
• Faria, H. J., Montesinos, H. M. (2009). Does Economic Freedom Cause Prosperity? An IV Approach, Public Choice, 141:103-127.
• Feinstein, J. S. (1991). An Econometric Analysis of Income Tax Evasion and Its Detection, RAND Journal of Economics, 22:14-35.
• Fuest, C., Riedel, N. (2009). Tax evasion, tax avoidance and tax expenditures in developing countries: A review of the literature, Report prepared for the UK department for International Development (DFID), http://www.sbs.ox.ac.uk/centres/tax/Documents/reports/TaxEvasion ReportDFIDFINAL1906.pdf, (15.10.2014).
• Gerxhanı, K. (2007). Did You Pay Your Taxes? How (Not) to Conduct Tax Evasion Surveys in Transition Countries, Social Indicators Research, 80: 555-581.
• Grubel, H. G. (1998). Economics Freedom and Human Welfare: Some Empirical Findings, Cato Journal, 18:287-304.
• Gwartney, J., Lawson, R. (2003). The concept and measurement of economic freedom, European Journal of Political Economy, 19:405-430.
• Gwartney, J., Lawson, R. (2006). Economic Freedom of the World - 2006 Annual Report, Canada: Fraser Institute, http://www.free theworld.com/2006/EFW2006complete.pdf , (16.11.2015).
• Gwartney, J., Lawson, R. and Norton, S. (2008). Economic Freedom of the World - 2008 Annual Report, Canada: Fraser Institute, http://www.freetheworld.com/2008/EconomicFreedomoftheWorld2008.pdf, (15.10.2015).
• Heritage Foundation, (2009). Economic Freedom of the World: 2009 Annual Report, http://www.freetheworld.com/datasets_efw.html, (25.11.2015).
• Jackson, B. R., Milliron, V.C. (1986). Tax Compliance Research: Findings, Problems and Prospects, Journal of Accounting Literature, 5:125-165.
• Madan, A. (2002). The Relationship Between Economics Freedom and Socio-Economic Development, The Park Place Economist, 10:84-93.
• O’Donnell, G. (2004). Financing Britain’s Future:Review of the Revenue Departments, Presented to Parliament by the Chancellor of the Exchequer by Command of Her Majesty, HM Treasury, http://hm-treasury.gov.uk/d/odonnell_fore_ch1_245%5B1%5D.pdf, (01.10.2014).
• Riahi-Belkaoui, A. (2004). Relationship between tax compliance internationally and selected determinants of tax morale, Journal of International Accounting, Auditing and Taxation, 13(2):135–143.
• Richardson, G. (2006), Determinants of Tax Evasion: A Cross-Country Investigation, Journal of International Accounting Auditing & Taxation, 15:150-169.
• Stroup, M. D. (2007). Economic Freedom, Democracy, and The Quality of Life”, World Development, 35:52-66.
• Tax Justice Network (2011), The Cost Of Tax Abuse: A Briefing Of Paper On The Cost Of Tax Evasion Worldwide, Tax Justice Network, http://www.tackletaxhavens.com/Cost_of_Tax_Abuse_TJN_Research_23rd_Nov_2011.pdf, (15.10.2015).
• The PRS Group (2012). Data base, http://www.prsgroup.com/ prsgroup_shopping cart/cdWizard5. aspx, (20.11.2012).
• The World Bank (2012). Data base, http://data.worldbank.org/, (10.10.2012).
• UNPD (2004). Human Development Report 2004, http://hdr.undp.org /en/media/hdr04_complete. pdf, (5.11.2012).
• Uslaner, E. (2007). Tax Evasion, Corruption, and the Social Contract in Transition, Georgia State University Andrew Young School of Policy Studies Annual Conference on Public Finance Issues, http://aysps.gsu.edu/isp/files/ISP_ CONFERENCES_TAX_COMPLIANCE_AND_EVASION_USLANER. pdf, (14.10.2012).
• Vukotic, V. (2008). Economic Freedom and New Economic Paradigm, Panoeconomicus, 55:115-128.
• Wallschutzky, I. G. (1984). Possible Causes of Tax Evasion, Journal of Economic Psychology, 5:371-384.
• World Economic Forum (2002). The Global Competitiveness Report 2001-2002, New York: Oxford University Press.
• Yikona, S., Slot, B., Geller, M., Hansen, B. and El Kadiri, F. (2011). Ill-gotten Money and the Economy: Experiences From Malawi And Namibia, The International Bank for Reconstruction and Development, The World Bank, http://siteresources.worldbank.org/EXTFINANCIALSECTOR/Resources /Ill_gotten_money_and_economy.pdf, (20.10.2012).