A note on the Erard & Feinstein tax audit model
(English)Manuscript (preprint) (Other academic)
This paper introduces a new method for the determination of near-optimal audit strategies with the Erard & Feinstein model. It is demonstrated that the solution method presented by Erard & Feinstein does not lead to optimal audit strategies. The new method simulates taxpayer behaviour for a class of audit functions among which the best function is selected. Using a simple class of functions, the resulting strategies are superior to those obtained with the Erard & Feinstein method.
The simulation method can easily handle variations of the model, for instance with involuntary taxpayer errors as well as with partially discrete true income distributions.
Tax auditing, audit strategy, tax fraud, mathematical modelling, optimization techniques
IdentifiersURN: urn:nbn:se:liu:diva-88751OAI: oai:DiVA.org:liu-88751DiVA: diva2:606048