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The effect of awareness and incentives on tax evasion

  • We examine the role of tax incentives, tax awareness, and complexity in tax evasion. We observe a specific type of tax evasion among business owners in Swedish administrative panel data, after the tax authority has approved all tax returns. For the period 2006–2009, approximately 5% of tax returns overstate a claimed dividend allowance. Tax awareness decreases and complexity increases the likelihood of misreporting. Our results indicate that some observed misreporting could be accidental, while some misreporting is deliberate tax evasion. We identify a positive and significant effect of tax rates on tax evasion, by exploiting a large kink in the tax schedule. The majority of misreporting cases remains undetected by the tax authority. Self-correction of tax evasion by taxpayers is the dominant type of detection.

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Metadaten
Author:Annette AlstadsaeterORCiD, Martin Jacob
URL:https://ssrn.com/abstract=2319837
Publisher:CESifo - Center for Economic Studies & Ifo Institute
Place of publication:München
Document Type:Working Paper
Language:English
Date of Publication (online):2018/06/12
Date of first Publication:2013/09/04
Release Date:2018/06/12
Tag:Einhaltung der Steuervorschriften; Ermittlung; Steuerbewusstsein; Steuerhinterziehung; Steuervollzug
Detection; Tax awareness; Tax compliance; Tax enforcement; Tax evasion
Page Number:40
Institutes:WHU Centers / WHU Financial Accounting & Tax Center (FAccT Center)
JEL-Classification:D Microeconomics / D1 Household Behavior and Family Economics / D14 Personal Finance
H Public Economics / H2 Taxation, Subsidies, and Revenue / H24 Personal Income and Other Nonbusiness Taxes and Subsidies
H Public Economics / H2 Taxation, Subsidies, and Revenue / H26 Tax Evasion
Licence (German):Copyright for this publication