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Modeling Tax Declaration Behavior and Quality of Tax Processing: A Game Theory Approach

Author

Listed:
  • Salah Salimian
  • Mahdi Movahedi Beknazar
  • Sattar Salimian
Abstract
Tax as one of the main levers in the micro and macro sectors of the economy it has greatly accelerated the growth of the economy, and today there are fewer countries that use it as a pillar Economic stability does not accept. On the other hand time receipt of taxes for countries is very vital and the basis of government planning for all projects and especially their budgeting. Governments are looking for ways to collect their target tax from taxpayers at the lowest possible cost. Thus, the most important step to achieve this goal is for taxpayers to declare the actual amount of tax they have paid in tax return. This paper deals with modeling the game between taxpayers and National Tax Administration. The results showed that the equilibrium declared tax of taxpayers is a function of assessed due tax, the quality of assessment groups, the number of assessments and the parameter of taxpayers’ dishonesty. The taxpayers’ equilibrium declared tax is increasing relative to the quality of their assessment groups and decreasing relative to other assessment groups. With increase in the likelihood of dishonesty, the declared tax of larger taxpayers will increase and the declared tax of smaller taxpayers will decrease and vice versa. Furthermore, if the quality difference of two assessment groups is only vertical, then assessed due tax and the equilibrium declared taxes will be equal. Finally, increase in the number of assessment leads to increase in the declared tax of larger taxpayers and decrease in the declared tax of smaller taxpayers and vice versa.

Suggested Citation

  • Salah Salimian & Mahdi Movahedi Beknazar & Sattar Salimian, 2023. "Modeling Tax Declaration Behavior and Quality of Tax Processing: A Game Theory Approach," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 9(1), pages 64-75.
    • Handle: RePEc:aiy:jnljtr:v:9:y:2023:i:1:p:64-75
    DOI: https://doi.org/10.15826/jtr.2023.9.1.129
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    game theory; modeling; tax; uniform distribution; uncertainty of assessment quality;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D29 - Microeconomics - - Production and Organizations - - - Other

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