1 December 2010, h 12:00
“Optimal dynamic tax evasion: a portfolio approach”
by Francesco Menoncin (Università di Brescia)
In this model we consider the decision of an individual who has to allocate his wealth among assets that are different in their risk and in the possibility to evade their revenue. Through an optimal dynamic allocation problem, we compute the optimal amount of evasion. Two main fiscal variables are taken into account: the probability to be caught and the frequency of controls. We show that evasion depends heavier on the second variables. Thus, we conclude that increasing the frequency of controls is a much more effective way to fight evasion. Furthermore, the higher evasion, the higher the amount of wealth invested in the riskless asset. Finally, we show that evasion makes optimal consumption increase.