Tax evasion and avoidance are challenges for tax policy from "summary" of Public Finance by Harvey S. Rosen
Tax evasion and avoidance present significant challenges for tax policy. Tax evasion refers to the illegal act of not paying taxes that are owed, often through dishonest means such as underreporting income or inflating deductions. On the other hand, tax avoidance involves using legal methods to minimize tax liability, such as taking advantage of loopholes in the tax code. Both practices can result in substantial revenue losses for the government, undermining the effectiveness of the tax system. Addressing tax evasion and avoidance requires a comprehensive approach that includes enforcement measures, such as audits and penalties, as well as reforms to the tax code to close loopholes and reduce opportunities for tax avoidance. However, implementing such measures is not always straightforward, as taxpayers may find ways to circumvent new regulations or enforcement efforts. Moreover, the complexity of the tax system itself can create opportunities for tax planning and avoidan...
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