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THE CONSEQUENCES OR EFFECTS OF TAX EVASION MACROECONOMIC EFFECTS • Public Debt • Fight Tax Evasion • Cuts in Public Spending MICROECONOMIC EFFECTS • Tax Evasion • Tax Avoidance • Traslation Public Debt The policy maker gets the missing resources from the financial markets, increasing the issuance of government securities. Despite being a short-term solution, this path causes a growing indebtedness of the state in the long term and the payment of interest on securities by the time they expire. Fight Tax Evasion The policy makers increases the control and tax assessment to identify tax evaders. It is a complex operation since tax assessment has a cost for the State and does not verify/discover all the situations of abuse. Cuts in Public Spending The policy maker reduces public expenditure in terms of lower supply of public goods and services. It is the most political difficult action. The inability to raise public revenue involves public spending cutting, a lower supply of public goods and public services. In some cases the cut in public spending is a good thing because it allows you to rationalize expenditure and eliminate waste (failure state). In other cases, it results in an additional economic burden borne by the less affluent citizens who have to face with an increasing tax pressure. Health Education Retirement funds Tax Evasion We can speak of tax evasion when the taxpayer subtracts illegally to tax payment. Tax evasion is punishable by law with administrative or penal measures according to the entity of the crime. Tax Avoidance Is the arrangement of one’s financial affairs to minimize tax liability within the law. Business uses of legal methods to modify an individual’s financial situation in order to lower the amount of income tax owed are put into practice. This is generally accomplished by claiming the permissible deductions and credits. This work has been powered by Ferdinando Renzulli VA AFM – school year 2015/2016