Evasion creates resource use misallocations when individuals alter their behavior to cheat on their taxes. It alters the distribution of income in unpredictable ways. Evasion may contribute to feelings of unfair treatment and disrespect for the law. It affects the accuracy of macroeconomic statistics. More broadly, without recognizing the existence of evasion it is not possible to understand the true impact of taxation.
Tax evasion raises many issues.
Each issue is considered. Measurement of tax evasion A major difficulty in analyzing evasion is in its measurement. After all, individuals have incentives to conceal their cheating. Several methods have been developed to measure evasion, all subject to imprecision and controversy. One method relies on information generated by the tax authority as part of its audit process.