nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2018‒01‒22
three papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. Testosterone, personality traits and tax evasion By Marcelo Arbex; Justin M. Carre; Shawn N. Geniole; Enlinson Mattos
  2. The dynamic effects of tax audits By Arun Advani; William Elming; Jonathan Shaw
  3. Intergovernmental Cooperation and Tax Enforcement By Ugo Troiano

  1. By: Marcelo Arbex (Department of Economics, University of Windsor); Justin M. Carre (Psychology Department, Nipissing University); Shawn N. Geniole (Social Neuroendocrinology Lab, Psychology Department, Nipissing University); Enlinson Mattos (São Paulo School of Economics, Getulio Vargas Foundation)
    Abstract: High testosterone levels in men may inhibit tax evasion. From a laboratory experiment with 121 young men, we present suggestive evidence of a weakly significant (at 10%) treatment effect, controlling for individual characteristics, prenatal and pubertal testosterone exposure, personality traits, medication and drugs use. Putative markers of prenatal and pubertal testosterone exposure and some personality traits might predict the decision of evading taxes. Reinforced by permutation tests for the treatment variable, a lower prevalence of tax evasion in the treated group is in line with recent results that suggest testosterone may increase prosocial or less selfish behavior.
    Keywords: Tax Compliance; Testosterone; Personality Traits; Experiment.
    JEL: H26 K42 C91 D91
    Date: 2018–01
  2. By: Arun Advani (Institute for Fiscal Studies); William Elming (Institute for Fiscal Studies and Institute for Fiscal Studies); Jonathan Shaw (Institute for Fiscal Studies and Turing Institute)
    Abstract: Understanding tax non-compliance and the effectiveness of strategies to tackle it is crucial for a modern tax authority. In this paper we study how and why audits impact reported tax in the years after audit - the dynamic effect - for individual income taxpayers. We exploit data from a random audit program covering almost 35,000 income tax self assessment returns in the UK. We show that audits raise reported tax liabilities for at least ve years after audit, with the magnitude of the impact declining over time. In total this raises an additional $1; 230 per audited individual in the fi ve years after audit, 1.5 times the direct revenue raised from the audit. Looking by income source, we see that the magnitude of the initial impact is lower for income components which are third party reported, and the impact declines more quickly for components that are more volatile. We develop a model to allow us to distinguish different mechanisms that might explain the presence of dynamic effects, and show our fi ndings can only be explained by audits providing improved information to the tax authority.
    Keywords: tax audits, tax revenue, tax reporting decisions, income tax, self assessment, HMRC
    JEL: D04 H26 H83
    Date: 2017–10–26
  3. By: Ugo Troiano
    Abstract: Improving the efficiency of tax collection is important for development and fairness purposes. I study the Audit Exchange Information Agreements, which are agreements between the states and the U.S. federal government to exchange information about income tax audit plans and techniques, signed between the 1950s and the 1970s. Adopting an augmented difference-in-differences identification strategy, I show that the program increased state income tax revenues by about 15 percent. I show that mobility and the reported income do not appear to react to the policy, suggesting that the effects may be linked to higher quality auditing. The effects are stronger in places where there are more civic and social organizations, suggesting that tax compliance is higher when there is more cooperative gathering.
    JEL: H21 H26 H77 N92
    Date: 2017–12

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