Question: Indicate how each of the following can affect tax evasion, and explain how the effect can take place: 1. an increase in marginal tax rates.

Indicate how each of the following can affect tax evasion, and explain how the effect can take place:

1. an increase in marginal tax rates.

2. a decrease in marginal tax rates.

3. a decrease in the complexity of tax codes.

4. an increase in the probability that a taxpayer’s return will be audited.

5. a decrease in the penalty for tax evasion.

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