Suppose that Sharlene faces a marginal income tax rate of 35 percent, and if she cheats on

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Suppose that Sharlene faces a marginal income tax rate of 35 percent, and if she cheats on her taxes, there is a 2 percent chance that she will be caught. Suppose also that the marginal penalty of tax evasion is 10R, where R is the amount of unreported income (in thousands of dollars). How much income will Sharlene fail to report?

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Public Finance In Canada

ISBN: 9781259030772

5th Canadian Edition

Authors: Harvey S. Rosen, Ted Gayer, Jean-Francois Wen, Tracy Snoddon

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