Essays on income tax fraud.

Summary The central objective of this thesis is to study the tax evasion behavior of taxpayers when they report only a portion of their income. The first chapter complements the existing literature by studying the level of income reporting and the effects of changes in tax rates, penalty rates, and control probabilities, by considering nonlinear tax and penalty functions, within the framework of utility expectation theory.The framework provided by cumulative prospect theory is then used in the second chapter. The framework provided by cumulative prospect theory is then used in the second chapter. The focus is on the dependence of the taxpayer's decisions on the benchmark income introduced by this theory. The third chapter characterizes the optimal income tax schedule and the control and penalty strategy to be implemented by the state when the taxpayers' evasion behavior verifies the properties of the prospect theory.