Pinje, Jori Veng and Boserup, Simon Halphen (2011): Tax evasion, information reporting, and the regressive bias hypothesis.
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A robust prediction from the tax evasion literature is that optimal auditing induces a regressive bias in e¤ective tax rates compared to statutory rates. If correct, this will have important distributional consequences. Nevertheless, the regressive bias hypothesis has never been tested empirically. Using a unique data set, we provide evidence in favor of the regressive bias prediction but only when controlling for the tax agency�s use of third-party information in predicting true incomes. In aggregate data, the regressive bias vanishes because of the systematic use of third-party information. These results are obtained both in simple reduced-form regressions and in a data-calibrated state-of-the-art model.
|Item Type:||MPRA Paper|
|Original Title:||Tax evasion, information reporting, and the regressive bias hypothesis|
|English Title:||Tax evasion, information reporting, and the regressive bias hypothesis|
|Keywords:||tax evasion; tax enforcement; information reporting; auditing|
|Subjects:||D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information ; Mechanism Design
K - Law and Economics > K4 - Legal Procedure, the Legal System, and Illegal Behavior > K42 - Illegal Behavior and the Enforcement of Law
H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H26 - Tax Evasion and Avoidance
|Depositing User:||Jori Pinje|
|Date Deposited:||28. Jan 2011 08:46|
|Last Modified:||13. Feb 2013 00:16|
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