Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/272036 
Year of Publication: 
2023
Series/Report no.: 
CESifo Working Paper No. 10392
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
Tax law is often uncertain. In particular, the use of tax shelters tends to be in the "grey area" between illegal tax evasion and legal tax avoidance. In this paper I show that uncertainty in tax law can help achieve higher efficiency than allowing or disallowing a tax shelter with certainty. Furthermore, a tax dispute can lead to a net welfare gain despite the litigation costs. Thus, tax uncertainty and tax disputes can be socially desirable.
Subjects: 
tax uncertainty
tax shelter
tax avoidance
rent-seeking
JEL: 
K34
H26
D72
Document Type: 
Working Paper
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