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Under the radar : the effects of monitoring firms on tax compliance
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Almunia, Miguel and Lopez-Rodriguez, David (2018) Under the radar : the effects of monitoring firms on tax compliance. American Economic Journal: Economic Policy, 10 (1). pp. 1-38. doi:10.1257/pol.20160229 ISSN 1945-7731.
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WRAP-under-radar-effects-monitoring-firms-tax-compliance-Almunia-2017.pdf - Accepted Version - Requires a PDF viewer. Download (4Mb) | Preview |
Official URL: https://doi.org/10.1257/pol.20160229
Abstract
This paper analyzes the effects of size-dependent tax enforcement on firms' tax compliance. 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 the eligibility threshold in order to avoid stricter tax enforcement. The response is stronger in sectors where transactions leave more paper trail, suggesting that monitoring effort and the traceability of information reported by firms are complements. We estimate that there would be substantial welfare gains from extending stricter tax monitoring to smaller businesses.
| Item Type: | Journal Article | |||||||||
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| Subjects: | H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HJ Public Finance |
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| Divisions: | Faculty of Social Sciences > Economics | |||||||||
| Library of Congress Subject Headings (LCSH): | Corporations--Taxation, Corporations--Taxation--Spain, Tax collection, Tax collection--Spain--Cost effectiveness--Econometric models , Small business, Small business--Taxation--Spain--Econometric models , Tax administration and procedure, Tax administration and procedure--Spain | |||||||||
| Journal or Publication Title: | American Economic Journal: Economic Policy | |||||||||
| Publisher: | American Economic Association | |||||||||
| ISSN: | 1945-7731 | |||||||||
| Official Date: | 28 February 2018 | |||||||||
| Dates: |
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| Volume: | 10 | |||||||||
| Number: | 1 | |||||||||
| Page Range: | pp. 1-38 | |||||||||
| DOI: | 10.1257/pol.20160229 | |||||||||
| Status: | Peer Reviewed | |||||||||
| Publication Status: | Published | |||||||||
| Access rights to Published version: | Restricted or Subscription Access | |||||||||
| Date of first compliant deposit: | 15 November 2017 | |||||||||
| Date of first compliant Open Access: | 9 February 2018 | |||||||||
| RIOXX Funder/Project Grant: |
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