Few tasks are as crucial for the future of democracy in Latin America—and, indeed, in other underdeveloped areas of the world—as strengthening the rule of law and reforming the system of taxation.
In ...this book, Marcelo Bergman shows how success in getting citizens to pay their taxes is related intimately to the social norms that undergird the rule of law. The threat of legal sanctions is itself insufficient to motivate compliance, he argues. That kind of deterrence works best when citizens already have other reasons to want to comply, based on their beliefs about what is fair and about how their fellow citizens are behaving. The problem of free riding, which arises when cheaters can count on enough suckers to pay their taxes so they can avoid doing so and still benefit from the government’s supply of public goods, cannot be reversed just by stringent law, because the success of governmental enforcement ultimately depends on the social equilibrium that predominates in each country. Culture and state effectiveness are inherently linked.
Using a wealth of new data drawn from his own multidimensional research involving game theory, statistical models, surveys, and simulations, Bergman compares Argentina and Chile to show how, in two societies that otherwise share much in common, the differing traditions of rule of law explain why so many citizens evade paying taxes in Argentina—and why, in Chile, most citizens comply with the law. In the concluding chapter, he draws implications for public policy from the empirical findings and generalizes his argument to other societies in Africa, Asia, and Eastern Europe.
In The Hypocritical Hegemon , Lukas Hakelberg takes a close look at how US domestic politics affects and determines the course of global tax policy. Through an examination of recent international ...efforts to crack down on offshore tax havens and the role the United States has played, Hakelberg uncovers how a seemingly innocuous technical addition to US law has had enormous impact around the world, particularly for individuals and corporations aiming to avoid and evade taxation. Through bullying and using its overwhelming political power, writes Hakelberg, the United States has imposed rules on the rest of the world while exempting domestic banks for the same reporting requirements. It can do so because no other government wields control over such huge financial and consumer markets. This power imbalance is at the heart of The Hypocritical Hegemon .
Tax Compliance and Enforcement Slemrod, Joel
Journal of economic literature,
12/2019, Volume:
57, Issue:
4
Journal Article
Peer reviewed
This paper reviews recent economic research in tax compliance and enforcement. After briefly laying out the economics of tax evasion, it focuses on recent empirical contributions. It first discusses ...what methodologies and data have facilitated these contributions, and then presents critical summaries of what has been learned. It discusses a promising new development—the analysis of randomized controlled trials mostly delivered via letters from the tax authority—and then reviews recent research using various methods about the impact of the principal enforcement tax policy instruments: audits, information reporting, and remittance regimes. I also explore several understudied issues worthy of more research attention. The paper closes by outlining a normative framework based on the behavioral response elasticities now being credibly estimated that allow one to assess whether a given enforcement intervention is worth doing.
With the rapid development of new forms of Internet business, the network broadcast industry has gradually become the tuyer. The huge tax evasion event of network anchors such as Huang Wei and Lin ...Shanshan broke out, which caused huge social public opinion, but also reflected that there are many special difficulties in the tax work of network broadcast industry at present. However, the existing tax collection and administration system of China can not adapt to the needs of the emerging industry, which induced a series of tax evasion events. This paper will grasp the particularity of the tax work in the network live broadcast industry and analyze the realistic difficulties encountered by the tax authorities in the taxation of network broadcast industry, and put forward the countermeasures for the situation of our country based on the international advanced experience, and propose a new way to deeply integrate the tax work and high-tech.
Tax Evasion and Inequality Alstadsæter, Annette; Johannesen, Niels; Zucman, Gabriel
The American economic review,
06/2019, Volume:
109, Issue:
6
Journal Article
Peer reviewed
Open access
Drawing on a unique dataset of leaked customer lists from offshore financial institutions matched to administrative wealth records in Scandinavia, we show that offshore tax evasion is highly ...concentrated among the rich. The skewed distribution of offshore wealth implies high rates of tax evasion at the top: we find that the 0.01 percent richest households evade about 25 percent of their taxes. By contrast, tax evasion detected in stratified random tax audits is less than 5 percent throughout the distribution. Top wealth shares increase substantially when accounting for unreported assets, highlighting the importance of factoring in tax evasion to properly measure inequality.
MEASURING INCOME TAX EVASION USING BANK CREDIT Artavanis, Nikolaos; Morse, Adair; Tsoutsoura, Margarita
The Quarterly journal of economics,
05/2016, Volume:
131, Issue:
2
Journal Article
Peer reviewed
Open access
We document that in semiformal economies, banks lend to tax-evading individuals based on the bank’s assessment of the individual’s true income. This observation leads to a novel approach to estimate ...tax evasion. We use microdata on household credit from a Greek bank and replicate the bank underwriting model to infer the banks estimate of individuals’ true income. We estimate that 43–45% of self-employed income goes unreported and thus untaxed. For 2009, this implies €28.2 billion of unreported income, implying forgone tax revenues of over €11 billion or 30% of the deficit. Our method innovation allows for estimating the industry distribution of tax evasion in settings where uncovering the incidence of hidden cash transactions is difficult using other methods. Primary tax-evading industries are professional services—medicine, law, engineering, education, and media. We conclude with evidence that contemplates the importance of institutions, paper trail, and political willpower for the persistence of tax evasion.
Third-party reporting and employers’ tax withholding are powerful compliance mechanisms, as long as the employer and employee do not collude to evade. In cooperation with the Norwegian Tax ...Administration we designed a randomized field experiment with unannounced on-site audits. Matching audit data to administrative registers, we provide evidence of collusive tax evasion. We find that firms assigned to be audited increased their subsequent wage reporting on behalf of their employees by 18 percent relative to firms assigned to the control group. The effect is more pronounced among small firms with few employees. Our results document limitations of third-party reporting, but also that these limitations can be counteracted by minor on-site audits.
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