This paper incorporates tax morale into the Allingham and Sandmo (1972) model of income tax evasion. Tax morale is modeled as a social norm for tax compliance. The strength of the norm is shaped ...endogenously, depending on the share of evaders in the society. Taxpayers act conditionally cooperative as their evasion depends on the others' compliance. We characterize the equilibrium which accounts for this interdependence and study the implications for tax and enforcement policies. The analysis is extended to the case of a society consisting of heterogenous communities. Individual evasion decisions are then embedded in a complex social structure and behavior is influenced by the norm compliance among morale reference groups. Within this framework, we highlight the role of belief management as an alternative policy tool.
The topic of tax evasion is still very relevant even at the time of dealing with the lingering economic consequences of the COVID-19 pandemic, at the time of the war in Ukraine and dealing with other ...associated phenomena, such as high inflation, price increases and others. The fight against tax evasion is often accompanied by the fact that many taxpayers are denied their rights, and often unjustly. More and more, such situations can be encountered in the field of VAT, which is also confirmed by the relatively rich case law of the Court of Justice of the European Union in the given area. The aim of the presented paper is to identify the fundamental problems of VAT deduction in the process of proof in the tax administration, to analyse selected decisions of the Court of Justice of the European Union and to synthesize knowledge applicable to taxpayers in the procedural defence of their rights and interests protected by law. We used several methods of writing scientific papers of this kind in processing the mentioned issue, but mainly analysis, synthesis, and partially also the comparative method, which we applied in mutual contexts.
Tax Morale Luttmer, Erzo F. P.; Singhal, Monica
The Journal of economic perspectives,
10/2014, Volume:
28, Issue:
4
Journal Article
Peer reviewed
Open access
There is an apparent disconnect between much of the academic literature on tax compliance and the administration of tax policy. In the benchmark economic model, the key policy parameters affecting ...tax evasion are the tax rate, the detection probability, and the penalty imposed conditional on the evasion being detected. Meanwhile, tax administrators also tend to place a great deal of emphasis on the importance of improving “tax morale,” by which they generally mean increasing voluntary compliance with tax laws and creating a social norm of compliance. We will define tax morale broadly to include nonpecuniary motivations for tax compliance as well as factors that fall outside the standard, expected utility framework. Tax morale does indeed appear to be an important component of compliance decisions. We demonstrate that tax morale operates through a variety of underlying mechanisms, drawing on evidence from laboratory studies, natural experiments, and an emerging literature employing randomized field experiments. We consider the implications for tax policy and attempt to understand why recent interventions designed to improve morale, and thereby compliance, have had mixed results to date.
Abstract
We analyze a unique episode in the history of monetary economics, the 2016 Indian “demonetization.” This policy made 86% of cash in circulation illegal tender overnight, with new notes ...gradually introduced over the next several months. We present a model of demonetization where agents hold cash both to satisfy a cash-in-advance constraint and for tax evasion purposes. We test the predictions of the model in the cross-section of Indian districts using several novel data sets including: the geographic distribution of demonetized and new notes for causal inference; night light activity and employment surveys to measure economic activity including in the informal sector; debit/credit cards and e-wallet transactions data; and banking data on deposit and credit growth. Districts experiencing more severe demonetization had relative reductions in economic activity, faster adoption of alternative payment technologies, and lower bank credit growth. The cross-sectional responses cumulate to a contraction in aggregate employment and night lights–based output due to the the cash shortage of at least 2 percentage points and of bank credit of 2 percentage points in 2016Q4 relative to their counterfactual paths, effects that dissipate over the next few months. Our analysis rejects monetary neutrality using a large-scale natural experiment, something that is still rare in the vast literature on the effects of monetary policy.
Most prior studies model tax avoidance as a function of firm-level characteristics and do not consider how individual executive characteristics affect tax avoidance. This paper investigates whether ...executives with superior ability to efficiently manage corporate resources engage in greater tax avoidance. Our results show that moving from the lower to upper quartile of managerial ability is associated with a 3.15% (2.50%) reduction in a firm’s one-year (five-year) cash effective tax rate. We examine how higher-ability managers reduce income tax payments and find that they engage in greater state tax planning activities, shift more income to foreign tax havens, make more research and development credit claims, and make greater investments in assets that generate accelerated depreciation deductions. Identifying a manager characteristic related to firms’ tax policy decisions adds to our understanding of the factors that explain the substantial variation in corporate income tax payments across firms.
This paper was accepted by Mary Barth, accounting
.
We study how cultural norms and enforcement policies influence illicit corporate activities. Using confidential Internal Revenue Service (IRS) audit data, we show that corporations with owners from ...countries with higher corruption norms evade more tax in the U.S. This effect is strong for small corporations and decreases as the size of the corporation increases. In the mid-2000s, the United States implemented several enforcement measures to increase tax compliance. We find that these enforcement efforts were less effective in reducing tax evasion by corporations whose owners are from corrupt countries. This suggests that cultural norms can be a challenge to legal enforcement.
•We tested the slippery slope framework of tax compliance in 44 countries.•Both trust and power increase intended tax compliance and mitigate tax evasion.•Trust increases voluntary compliance and ...power increases enforced compliance.•Power enhances voluntary compliance only if citizens trust the authorities.•Effects were relatively stable across the 44 countries.
The slippery slope framework of tax compliance emphasizes the importance of trust in authorities as a substantial determinant of tax compliance alongside traditional enforcement tools like audits and fines. Using data from an experimental scenario study in 44 nations from five continents (N = 14,509), we find that trust in authorities and power of authorities, as defined in the slippery slope framework, increase tax compliance intentions and mitigate intended tax evasion across societies that differ in economic, sociodemographic, political, and cultural backgrounds. We also show that trust and power foster compliance through different channels: trusted authorities (those perceived as benevolent and enhancing the common good) register the highest voluntary compliance, while powerful authorities (those perceived as effectively controlling evasion) register the highest enforced compliance. In contrast to some previous studies, the results suggest that trust and power are not fully complementary, as indicated by a negative interaction effect. Despite some between-country variations, trust and power are identified as important determinants of tax compliance across all nations. These findings have clear implications for authorities across the globe that need to choose best practices for tax collection.
This article attempts to estimate the magnitude of corporate tax avoidance and personal tax evasion through offshore tax havens. US corporations book 20 percent of their profits in tax havens, a ...tenfold increase since the 1980; their effective tax rate has declined from 30 to 20 percent over the last 15 years, and about two-thirds of this decline can be attributed to increased international tax avoidance. Globally, 8 percent of the world's personal financial wealth is held offshore, costing more than $200 billion to governments every year. Despite ambitious policy initiatives, profit shifting to tax havens and offshore wealth are rising. I discuss the recent proposals made to address these issues, and I argue that the main objective should be to create a world financial registry.
O presente estudo teve por objetivo avaliar a relação entre a complexidade tributária brasileira e o nível de evasão do país. Estudos internacionais que já verificaram essa relação não foram ...conclusivos em seus resultados, apesar de, preponderantemente, os resultados apontarem para uma forte interação entre complexidade e evasão fiscal. A presente pesquisa contribui no país ao testar se a complexidade tributária, enquanto um determinante internacionalmente reconhecido da evasão fiscal, possui influência significativa no nível de sonegação tributária. Para tanto, utilizou-se de modelo de regressão linear múltipla, seguindo o método já utilizado em estudos internacionais, com uma amostra de dados de evasão fiscal, complexidade tributára, carga tributária e percepção de corrupção captadas no Fundo Monetário Internacional, Banco Mundial e Transparência Internacional, no período de 2005 a 2015. Os resultados revelaram que a complexidade tributária não apresentou significância estatística para explicar o comportamento da evasão fiscal brasileira, fato divergente da teoria clássica a respeito da intereção entre essas variáveis. Além disso, observou-se que a carga tributária foi o único determinante no nível de evasão da amostra tratada. Com isso, o estudo apresenta que o tratamento da complexidade tributária brasileira talvez não tenha a dimensão que se é comumente idealizada quando associam a sua participação no contexto de evasão fiscal. Desta forma, o trabalho inaugura os estudos empíricos sobre complexidade tributária brasileira, permitindo que dados do Brasil possam ser melhor conhecidos e debatidos por acadêmicos, governos e empresas na melhoria do conexto tributário nacional.
Top Incomes in the Long Run of History Atkinson, Anthony B.; Piketty, Thomas; Saez, Emmanuel
Journal of economic literature,
03/2011, Volume:
49, Issue:
1
Journal Article
Peer reviewed
Open access
A recent literature has constructed top income shares time series over the long run for more than twenty countries using income tax statistics. Top incomes represent a small share of the population ...but a very significant share of total income and total taxes paid. Hence, aggregate economic growth per capita and Gini inequality indexes are sensitive to excluding or including top incomes. We discuss the estimation methods and issues that arise when constructing top income share series, including income definition and comparability over time and across countries, tax avoidance, and tax evasion. We provide a summary of the key empirical findings. Most countries experience a dramatic drop in top income shares in the first part of the twentieth century in general due to shocks to top capital incomes during the wars and depression shocks. Top income shares do not recover in the immediate postwar decades. However, over the last thirty years, top income shares have increased substantially in English speaking countries and in India and China but not in continental European countries or Japan. This increase is due in part to an unprecedented surge in top wage incomes. As a result, wage income comprises a larger fraction of top incomes than in the past. Finally, we discuss the theoretical and empirical models that have been proposed to account for the facts and the main questions that remain open.
PDF
