Impact of Tax Evasion and Tax Corruption on the Private Investment and Public Expenditure as Factors of Economic Growth

In this paper, we consider the role of the stock market as a tax exemption policy and we also examine the impact of tax evasion and Tax corruption on growth factors.

The research method is theoretical and fundamental, and offering a continuous timestochastic growth model to study the effects of tax evasion and tax corruption on the level and volatility of private investment and public spending that are both factors of growth. In our model tax evasion and tax corruption are equivalent to diverting public resources that are productive. Stock market carry out here have the same role as a policy of tax exemption.

We argue that if the share of private investment in the percentage of GDP is growing and, on the other hand, the low-level government expenditure efficiency, if the offenders have the opportunity to invest in the proceeds of their illegal activities in the stock market, Tax evasion and Tax corruption can help develop private sector investment and tax corruption may contribute to the development of private capital if people find an opportunity to invest the proceeds of their illegal activities in equity markets

We initial emphasize the role of equity markets, showing that the evasion outcome for the private sector is not as a consequence viewed as a burden.