Question

1. "Tax evasion is a victimless crime, because tax evasion increases economic efficiency." Is this statement true or false? Explain.

a. Would this statement be true if there were a way to force all taxpayers to be honest? Explain.

Definition of economic efficiency: state of the world in which you can't make a person better off without making someone else worse off.

Answer 1

1.It is a false statement that, "Tax evasion is a victimless crime,because tax evasion increases economic efficiency."In fact tax evasion decreases economic efficiency.Government might face loss when tax is evaded as there will be decline in revenue income.Revenue income is gained by selling goods and from taxpayers too.So,if taxpayers deny from paying tax then government would find it difficult to attain targeted revenue.Tax evasion also increases illegal money and the victims are the state and country.All these activities stop the country from accelerating its economic efficiency.Tax evasion slows down the process of achieving economic efficiency.Therefore, it is false that tax evasion is victimless crime.It doesn't increase economic efficiency.

a.)Yes,the statement would be true if there were a way to force all taxpayers to be honest.Both country and state governments can achieve maximum revenue and could decrease most of the illegal activities if taxpayers are honest about their earned income.When taxpayers are forced to be honest, then the government will be able to calculate the actual per capita income and even higher revenue will be attained.If higher revenue is acquired ,then it is an indication of growth in economic efficiency and then no victims will persist in tthe country.Hence,the statement would be true if there were a way to force all taxpayers to be honest.