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on Informal and Underground Economics |
| By: | Antinyan, Armenak; Asatryan, Zareh |
| Abstract: | Taxpayer nudges - behavioral interventions that aim to increase tax compliance without changing the underlying economic incentives of taxpayers - are used increasingly by governments because of their potential cost-effectiveness in raising tax revenue. We collect about a thousand treatment effect estimates from over 40 randomized controlled trials, and in a meta-analytical framework show that non-deterrence nudges - interventions pointing to elements of individual tax morale - are on average ineffective in curbing tax evasion, while deterrence nudges - interventions emphasizing traditional determinants of compliance such as audit probabilities and penalty rates - are potent catalysts of compliance. These effects are, however, fairly small in magnitude. Deterrence nudges increase the probability of compliance by only 1.5-2.5 percentage points more than non-deterrence nudges, while the effects are likely to be bound to the short-run, and are somewhat inflated by selective reporting of results. |
| Keywords: | Tax compliance,Randomized control trials,Nudging,Meta-analysis |
| JEL: | C93 D91 H26 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:19055&r=all |
| By: | Antonio Acconcia (Università di Napoli Federico II and CSEF); Marcello D'Amato (Università di Salerno, CELPE and CSEF); Riccardo Martina (Università di Napoli Federico II and CSEF); Marisa Ratto (Universitè Paris-Dauphine) |
| Abstract: | The unification of Italy in 1861 determined that all institutions of the pre-unitary states were replaced by those of the new-born Kingdom of Italy, thus implying common rules for agents formerly obeying to different ones. Moreover, a major tax reform was also set in that determined differential increments of the tax burden across provinces. We investigate the potential implications of these events for tax compliance. By comparing a province-level measure of tax evasion just after the reform with a corresponding recent one, we show a strong process of convergence in compliance. Non-negligible spatial differences in tax evasion, however, still persist nowadays. Further empirical evidence suggests that such differences can be at least in part traced back to the tax reform. |
| Keywords: | tax evasion dynamics, decentralization, local enforcement externality, learning. |
| JEL: | D62 D81 H26 K41 K42 |
| Date: | 2019–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:sef:csefwp:551&r=all |
| By: | De Neve, Jan-Emmanuel; Imbert, Clement; Spinnewijn, Johannes; Tsankova, Teodora; Luts, Maarten |
| Abstract: | We study the impact of deterrence, tax morale, and simplifying information on tax compliance. We ran _ve experiments spanning the tax process which varied the communication of the tax administration with all income taxpayers in Belgium. A consistent picture emerges across experiments: (i) simplifying communication increases compliance, (ii) deterrence messages have an additional positive effect, (iii) invoking tax morale is not effective. Even tax morale messages that improve knowledge and appreciation of public services do not raise compliance. In fact, heterogeneity analysis with causal forests shows that tax morale treatments backfire for most taxpayers. In contrast, simplification has large positive effects on compliance, which diminish over time due to follow-up enforcement. A discontinuity in enforcement intensity, combined with the experimental variation, allows us to compare simplification with standard enforcement measures. Simplification is far more cost-effective, allowing for substantial savings on enforcement costs, and also improves compliance in the next tax cycle. |
| Keywords: | tax compliance; field experiements; simplification; enforcement |
| JEL: | C93 D91 H21 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:102725&r=all |
| By: | Daunfeldt, Sven-Olov (Institute of Retail Economics (Handelns Forskningsinstitut)); Gidehag, Anton (Institute of Retail Economics (Handelns Forskningsinstitut)); Rudholm, Niklas (Institute of Retail Economics (Handelns Forskningsinstitut)) |
| Abstract: | In 2007, the Swedish government tried to prevent firms from underreporting their wage payments by implementing a reform that required restaurants and hairdressers to have staff registers. Employers were required to provide detailed information on when their employees were working, and the Swedish Tax Authority was also given a mandate to carry out unannounced control visits and to impose fines on firms that had not properly filled out their staff registers. We estimate the effect of this reform on firms’ wage reporting using propensity score matching combined with a difference-in-differences analysis. Then, we compare the increase in tax revenues with the costs that the staff register system generated for the firms and the Swedish Tax Authority. Our results show that the total costs of the system exceeded the increase in tax revenues by approximately 355 million SEK ($36.6 million) over a four-year period, even when utilizing point estimates that are likely to overstate the effect on wage reporting. We thus conclude that considering the costs associated with the reform, the staff register reform is not economically justified. |
| Keywords: | tax evasion; firm regulation; quasi-experimental method; unreported wages; propensity score matching |
| JEL: | H26 H32 K34 L51 |
| Date: | 2019–12–20 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:hfiwps:0006&r=all |
| By: | Torsvik, Gaute; Raaum, Oddbjørn; Løyland, Knut; Øvrum, Arnstein |
| Abstract: | Tax administrations use machine learning to predict risk scores as a basis for selecting individual taxpayers for audit. Audits detect noncompliance immediately, but may also alter future filing behavior. This analysis is the first to estimate compliance effects of audits among high-risk wage earners. We exploit a sharp audit assignment discontinuity in Norway based on individual tax payers risk score. Additional data from a random audit allow us to estimate how the audit effect vary across the risk score distribution. We show that the current risk score audit threshold is set far above the one that maximizes net public revenue. |
| Date: | 2019–04–12 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:6u3ns&r=all |