Almunia, Miguel and Lopez-Rodriguez, David (2015) Under the radar : the effects of monitoring firms on tax compliance. Working Paper. Coventry: University of Warwick. Department of Economics. Warwick economics research papers series (TWERPS) (1070). (Unpublished)

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Abstract

This paper analyzes the effects on tax compliance of monitoring the information trails generated by firms’ activities. We exploit quasi-experimental variation generated by a Large Taxpayers Unit (LTU) in Spain, which monitors firms with more than 6 million euros in reported revenue. Firms strategically bunch below this threshold in order to avoid stricter tax enforcement. This response is stronger in sectors where transactions leave more paper trail, implying that monitoring effort and the traceability of information reported by firms are complements. We calculate that there would be substantial welfare gains from extending stricter tax monitoring to smaller businesses.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HJ Public Finance
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Corporations -- Taxation, Taxpayer compliance
Series Name:	Warwick economics research papers series (TWERPS)
Publisher:	University of Warwick. Department of Economics
Place of Publication:	Coventry
ISSN:	0083-7350
Official Date:	31 August 2015
Dates:	Date Event 31 August 2015 Available
Number:	1070
Number of Pages:	50
Institution:	University of Warwick
Status:	Not Peer Reviewed
Publication Status:	Unpublished
Access rights to Published version:	Open Access (Creative Commons)
Funder:	Fundación Rafael del Pino, Robert D. Burch Center for Tax Policy and Public Finance‏

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