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on Public Finance |
| By: | James Alm (Tulane University) |
| Abstract: | Economists have put forth many specific tax design recommendations over the years, both for piecemeal changes to the tax system and for more fundamental reforms. These recommendations have typically been timely, plausible, and even elegant, and they often have had widespread agreement among economists, even those of greatly differing political sentiments. However, many -- indeed perhaps most -- of these proposals have gone nowhere in the actual policy implementation stage. Why is this? I argue here that the main reason for this lack of impact is politics -- and a failure by economists to consider fully the central role of politics in policy making. Of course, all policy changes in democracies, including those that involve taxes, necessarily revolve around political considerations by elected politicians as policy makers. However, my argument goes beyond this obvious truism. Instead, I emphasize one specific aspect of politics: Who gains and who loses from a tax policy change? I argue that these are the types of political considerations that are decisive because it is the distributional effects of policies that determine how people vote and so that also determine how their elected representatives vote. I illustrate these points with a brief -- and a deliberately selective -- history of what I term 'clever' policy recommendations made over the years by major figures in the broad field of public economics and the narrower field of taxation, I then discuss the many possible reasons for this lack of policy impact, and I identify the factor that seems most likely to drive actual tax policy choices -- the effects of tax policies on the winners and losers of the policies, as determined by broadly defined 'distributional effects'. I finish with a discussion of the ways in which economics -- and other disciplines -- might more productively contribute to the policy discussion. Along the way, I indicate the ways in which the chapters in this volume contribute to the ongoing policy discussion. |
| Keywords: | Taxation; tax policy; tax incidence; distributional effects; voting; political economy |
| JEL: | H20 H22 H50 D30 D72 D78 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:tul:wpaper:2601 |
| By: | James Alm (Tulane University) |
| Abstract: | Tax reform and tax administration are closely linked. However, these links are not always fully discussed, fully analyzed, or even fully appreciated. In this paper, I discuss the links between tax administration reform and tax reform. I begin by discussing some basic aspects of tax administration, which suggest three "paradigms" for tax administration that emerge from the theoretical and empirical literature on what motivates individuals to pay -- or not to pay -- their taxes. I then summarize the main reasons why countries reform their tax systems and when these reforms are most likely to be successful and even to occur. This then leads to a detailed discussion of the central role of tax administration reform in tax reform, including an examination of the role of new technologies in tax administration. My main conclusions are twofold. First, a successful reform of a country's tax system requires also a concomitant and concurrent successful reform of a country's tax administration. Second, successful tax administration reform needs to go well beyond changes in enforcement policies alone. |
| Keywords: | Tax reform; tax administration; tax compliance; services; trust |
| JEL: | H20 H26 H60 H83 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:tul:wpaper:2602 |
| By: | Brun Lidia (European Commission - JRC); Speitmann Raffael (European Commission - JRC); Stasio Andrzej Leszek (European Commission - JRC); Stoehlker Daniel (European Commission - JRC) |
| Abstract: | This paper examines the Corporate Income Tax (CIT) compliance gap, the difference between revenue due under full compliance and actual collections, across 23 EU Member States, Norway, and Iceland. Existing bottom-up and top-down estimation methods each face notable limitations: Bottom-up approaches are data-intensive and hard to harmonise, while top-down methods depend on uncertain adjustments for undeclared activity and cannot adequately capture multinational profit shifting. An implementation of the IMF RA-GAP top-down method in Spain illustrates these challenges, revealing substantial data needs, conceptual mismatches between national accounts and tax data, and reliance on unverifiable assumptions. To address these issues, the Joint Research Centre proposes a simplified top-down methodology based on Eurostat s exhaustiveness adjustments. This approach is transparent, reproducible, and feasible with data already reported by Member States. Applying it across countries reveals large variation in CIT gaps ranging from below 3% in high-compliance jurisdictions to above 20 35% in others with an unweighted average gap of 10.9% (around EUR 38 billion in 2017). Sectoral patterns consistently show higher gaps in informal, cash-intensive industries and lower gaps in regulated sectors. The paper concludes that while no single method captures all dimensions of non-compliance, the proposed approach offers a practical tool for regular EU-wide monitoring. Its effectiveness depends on the timely and harmonised publication of exhaustiveness adjustment data to support consistent CIT gap estimation and policy analysis. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:taxref:202507 |
| By: | Sebastian Dyrda; Guangbin Hong; Muhammad Ali Sajid; Joseph B. Steinberg |
| Abstract: | We study international spillovers of corporate tax reforms in a fragmented global tax regime. Using firm-level evidence on the 2017 U.S. Tax Cuts and Jobs Act (TCJA) and a quantitative general-equilibrium model, we illustrate how multinational enterprises (MNEs) propagate local policy shocks throughout the global economy. Our framework emphasizes two key intrinsic properties of intangible capital: non-rivalry and mobile ownership. We find the TCJA generated positive outward spillovers: First, it boosted U.S. MNEs’ intangible investment, raising their foreign subsidiaries’ output. Second, it increased tangible investment of foreign MNEs’ U.S. subsidiaries, incentivizing them to expand intangible investment at home. Conversely, a Global Minimum Tax (GMT) implemented by the rest of the world generates negative inward spillovers for the United States, even if U.S.-parented MNEs are exempt. These findings illustrate that there is no such thing as a purely domestic corporate tax policy. |
| JEL: | F23 H25 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34627 |
| By: | David Henning; Christos Kotsogiannis; Jukka Pirttilä; Luca Salvadori |
| Abstract: | Making use of a rich administrative dataset on Ugandan firms' tax filings covering the period 2013-21, this paper investigates the impact of tax audits on voluntary compliance, contrasting the effect of one vs multiple audits. Using a matched difference-in-differences approach with similar unaudited firms as controls, and a stacked design to address staggered treatment timing, the analysis shows that among firms that consistently file taxes over the study period, audits induce higher value added tax (VAT) liabilities. |
| Keywords: | Taxation, Audits, Tax evasion, Tax administration, Tax compliance |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:unu:wpaper:wp-2025-110 |
| By: | Abhinav Khemka; Claudia Serra-Sala |
| Abstract: | We investigate how political corruption affects citizens' willingness to disclose tax evasion. We conducted a survey experiment with 1, 200 respondents in Bangalore, India, combining corruption vignettes and list experiments. Respondents were randomly presented with hypothetical candidates whose attributes varied along three dimensions: (a) alleged honesty versus corruption; (b) prioritization of infrastructure versus other public spending; and (c) political party affiliation. |
| Keywords: | Corruption, Tax evasion, List experiment, India, Voting behaviour |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:unu:wpaper:wp-2025-114 |
| By: | Matěj Bajgar (Charles University, CERGE-EI); Petr Janský (Charles University, CERGE-EI); Tijmen Tuinsma (Tax Justice Network, Charles University) |
| Abstract: | We study whether stronger tax compliance among multinationals can reduce industry concentration. Exploiting the 2016 introduction of country-by-country reporting in the European Union as a natural experiment, we implement a difference-in-differences design comparing large multinational groups subject to the reform with unaffected firms. We find that increased tax compliance led to a significant decline in multinationals’ consolidated global sales, with a one-percentage-point rise in effective tax rates associated with a 1.8% reduction in sales. Sales of the affected multinationals’ subsidiaries also declined, and industry concentration fell in sectors where top firms were subject to the reform. The results suggest that curbing profit-shifting can reduce the competitive advantage of large multinationals and, consequently, industry concentration. |
| Keywords: | tax compliance; tax avoidance; multinational; corporate tax; effective tax rate; industry concentration; European Union |
| JEL: | F23 H26 L11 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:dbp:wpaper:038 |
| By: | Adrienne Lees; Maria Jouste; Nicholas Musoke; Joseph Okello Ayo |
| Abstract: | The digitalization of tax administration promises improved efficiency and increased tax revenues. In recent years, the information trail of the value-added tax (VAT) has been digitalized in many developing countries. We evaluate the impact of introducing an e-invoicing system in Uganda using administrative tax data in a synthetic difference-in-differences framework. To identify the effects on firms' reporting behaviour, we exploit a policy change that exposed a subset of VAT-registered firms to stricter enforcement of the e-invoicing mandate. |
| Keywords: | Value-added tax, Uganda, Tax administration |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:unu:wpaper:wp-2025-112 |