Dodging the taxman firm misreporting and limits to tax enforcement by Paul Carrillo, Dina Pomeranz and Monica Singhal
By: Carrillo, Paul
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Contributor(s): Pomeranz, Dina | Singhal, Monica.
Material type: 
ArticlePublisher: 2017Subject(s): IMPUESTOS | RECAUDACION | EVASION FISCAL | ESFUERZO FISCAL | ECUADOR | SOCIEDADES
In:
American Economic Journal. Applied Economics v. 9, n. 2, April 2017, p. 144-164Summary: Reducing tax evasion is a priority for many governments. A growingliterature argues that verifying taxpayer reports against third-party information is critical for tax collection. However, effectiveness can be limited when tax authorities face constraints to credibleenforcement and taxpayers make offsetting adjustments on other margins. We exploit a policy intervention in which Ecuadorian firms were notified about detected revenue discrepancies. Most firms simply failed to respond. Firms that responded increased reported revenue, matching the discrepancy amount when provided. However,they also increased reportedcosts by 96 cents per dollar of revenue adjustment, resulting in minor increases in tax collection.
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Disponible en línea a través de la Biblioteca del Instituto de Estudios Fiscales. Bibliografía. Resumen. Conclusión.
Reducing tax evasion is a priority for many governments. A growingliterature argues that verifying taxpayer reports against third-party information is critical for tax collection. However, effectiveness can be limited when tax authorities face constraints to credibleenforcement and taxpayers make offsetting adjustments on other margins. We exploit a policy intervention in which Ecuadorian firms were notified about detected revenue discrepancies. Most firms simply failed to respond. Firms that responded increased reported revenue, matching the discrepancy amount when provided. However,they also increased reportedcosts by 96 cents per dollar of revenue adjustment, resulting in minor increases in tax collection.
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