This paper builds an economic model where the taxpayer makes his tax evasion decision against possible penalties from the tax authority to examine the effect of an increase in the tax rates on tax evasion. First, if the tax authority makes his audit effort in the increment of tax base, then the effect will depend on the elasticity of marginal productivity of audit effort. If the elasticity is small, an increase in the tax rates leads to greater tax evasion and less tax compliance. This result accords well with empirical findings. Secondly, when the audit effort is devoted to making the probability higher, the result would turn to agree with the theoretical result in the literatures. Finally, according to economic intuition, lower income, higher probability and higher penalty will lead to higher tax compliance.