nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2015‒11‒15
two papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. Essays in development economics and public finance By Hoseini, Mohammad
  2. Bypassing progressive taxation: fraud and base erosion in the Spanish income tax (1970-2001) By Sara Torregrosa

  1. By: Hoseini, Mohammad (Tilburg University, School of Economics and Management)
    Abstract: This dissertation studies a range of topics in development economics and public finance. The first two chapters contain empirical studies on India addressing the impact of financial development on poverty and informality. Using time and state-level variation across Indian states, the first study examines the effect of financial liberalization in 1991on poverty and investigates the underlying mechanisms. The second study examines the effect of financial deepening and bank outreach on informality using micro data of Indian manufacturing sector. The next two chapters investigate the optimal government policy to reduce<br/>tax evasion in a value-added tax (VAT) system. Chapter three addresses the problem of misreporting by registered traders in the VAT. The last chapter models the role of inter-sectoral linkages on tax evasion of informal firms in an input-output framework and justifies the results using Indian data.<br/>
    Date: 2015
  2. By: Sara Torregrosa (Universitat de Barcelona)
    Abstract: In this paper I estimate under-assessment of incomes in the Personal Income Tax during the years following its introduction in Spain. The methodology combines an analysis of discrepancy with National Accounts and an econometric exercise, which follows and slightly modifies the Feldman and Slemrod (2007) procedure, based on the relation of reported charitable donations with the composition of income in tax micro-data. Both calculations show that concealment of income differed substantially across sources and levels, with better compliance at the bottom of the distribution of taxpayers. Because of this, fraud made the tax less progressive than it was on paper. Compliance improved over the next decades, but the overall levels were still far from those attained in developed countries, because of lack of administrative capacity or political will to enforce the new regulation. In this way, general, comprehensive income taxation was hardly a reality 20 years after its introduction.
    Keywords: Tax evasion, base erosion, under-reporting, progressivity, personal income tax
    JEL: H23 H24 H26 N44
    Date: 2015

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