Florian Baumann, Tim Friehe, Marcus Jansen
On the Economics of Contribution Evasion
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This paper considers the tax evasion decision when taxes constitute contributions to the financing of social insurance programs, such as unemployment insurance. We call this evasion contribution evasion and establish that critical differences exist between contribution evasion and tax evasion, the central difference being that contributions entitle the contributor to future claims. Furthermore, we derive a recommendation for the reduction of contribution evasion, referring to the distinction between Bismarckian and Beveridgean social security systems.