Trust And The Protection Of Property Rights

A lot of papers have studied the problem of tax evasion (tax evasion) and its economicconsequences, Ballas.AA and Tsoukas (1998) studied the vicious problem of tax evasion inGermany, and that this outcome stems from that people don’t trust their government..Galina and Robert W.McGee (2003) studied the problem of taxation from a centrallyplanned country to a market economy and of public finance. They believe that thegovernment of the country, from transition to a market economy,need to adopt theway,which different from the planned economy to taxation and public finance, finance. Allof above literatures to tax evasion is a global phenomenon, it is the taxpayers in variousways to reduce or avoid an act of the tax burden, including occult income, and falsifying ornot telling the relevant invoices, all of that inflated the cost can be deducted to evadetaxation. The broad tax evasion is the taxpayer who uses various means to evade tax as anact. Concrete can be divided into two kinds: the behavior of less satisfied may choose to notpay taxes (1) using illegal means; it is generally referred to as "tax evasion" in Westerncountries, which referred to as "tax evasion" in our country or "refusal to pay" or "taxevasion", and (2)using lawful means not to tax.which also referred to as "tax avoidance".The narrow tax evasion refers to the taxpayer uses illegal means to pay less or not paytaxes.Established in this paper,we use a simple model to analyze the reasons of tax evasion,as well as its economic consequences. The model that the trust will affect whether anindividual chooses to tax evasion affect a country or region’s ability to tax the capacitywould affect a State for its governmental capacity investment and capacity "level ofinvestment will affect a country’s level of protection of property rights, different levels ofprotection of property rights would affect the private return on investment which willultimately affect the level of private investment and determine a country’s economicgrowth.The article maintains that trust and the protection of property rights has a strongpositive correlation with the trust, protection of property rights, in turn, lead to more trust,which leads to multiple equilibria. The main implications of the model is that trust in countries with low protection of property rights will result in lower trust, in countries withhigh trust will produce a higher degree of protection of property rights.