administrative reform as credible commitment the impact of autonomy on revenue authority performance in latin america abstract during the past decade diverse developing countries have introduced radical reforms in their collection of taxes in more than 15 countries traditional tax departments have been granted the status of semi autonomous revenue authorities aras this paper investigates the design and impact of aras in latin america arguing that politicians create aras in order to signal a credible commitment to taxpayers that tax administration will be more effective fair and competent using survey data from corporate taxpayers and tax professionals in bolivia mexico peru and venezuela the paper presents econometric analyses and performance indicators that support the hypothesis that there is a link between perceptions of credibility performance and agency autonomy

applications of behavioural economics to tax evasion the paper reviews recent models that have applied the techniques of behavioural economics to the analysis of the tax compliance choice of an individual taxpayer the construction of these models is motivated by the failure of the yitzhaki version of the allingham sandmo model to predict correctly the proportion of taxpayers who will evade and the effect of an increase in the tax rate upon the chosen level of evasion recent approaches have applied non expected utility theory to the compliance decision and have addressed social interaction the models we describe are able to match the observed extent of evasion and correctly predict the tax effect but do not have the parsimony or precision of the yitzhaki model

tax evasion and heuristics a research note abstract the paper examines the heuristics which taxpayers use in making tax evasion decisions the following propositions are tested in an experiment using students first the taxpaper s own level of evasion will be positively related to what he perceives as the levels of evasion by others second taxpayers who have been audited are more likely to assess the probability of audit as higher and therefore decrease their levels of evasion the experimental results fail to support the first proposition but do support the second suggesting the presence of an availability effect

inflation and tax evasion an empirical analysis this paper contains an analysis of the effect of inflation on aggregate tax evasion in the united states over the period 1947 81 it is found that tax evasion in both absolute and relative terms is positively related to the inflation rate further the results indicate that aggregate evasion has risen in both absolute and relative terms with increases in the marginal tax rate but has fallen with increases in the detection probability the penalty rate and the wage share of income finally evasion has risen in absolute terms but has fallen in relative terms when real true income has risen

representative evidence on lying costs abstract a central assumption in economics is that people misreport their private information if this is to their material benefit several recent models depart from this assumption and posit that some people do not lie or at least do not lie maximally these models invoke many different underlying motives including intrinsic lying costs altruism efficiency concerns or conditional cooperation to provide an empirically validated microfoundation for these models it is crucial to understand the relevance of the different potential motives we measure the extent of lying costs among a representative sample of the german population by calling them at home in our setup participants have a clear monetary incentive to misreport misreporting cannot be detected reputational concerns are negligible and altruism efficiency concerns or conditional cooperation cannot play a role yet we find that aggregate reporting behavior is close to the expected truthful distribution suggesting that lying costs are large and widespread further lab experiments show that this result is not driven by the mode of communication

the informal sector in developed and less developed countries a literature survey the main goal of this study is two fold 1 to provide ageneral overview of the contributions to the literature on theinformal sector with a special focus on the public choiceapproach and 2 to compare these contributions across twoinstitutionally different types of countries developed andless developed developing and transition countries thepaper focuses on the criteria used to define the informalsector the relationship between the formal and informaleconomy tax evasion and public choice analysis it isstressed throughout this paper that the distinction betweenthe two types of countries is of key importance

on the cyclicality of r d this paper explores the link between short run cycles and long run growth by examining the cyclicality of rd but aggregate data repeatedly show that rd but interestingly estimates using demand shift instruments suggest that it responds asymmetrically to demand shocks we propose that liquidity constraints and technology improvement cause the observed pro cyclicality of r d

culture compliance and confidentiality taxpayer behavior in the united states and italy the experimental economics center and the department of economics of the andrew young school of policy studies georgia state university atlanta ga and the center for experimental economics at fondazione university ca foscari italy

an evaluation of the draft final act of the uraguay round this paper presents an evaluation of the proposed draft final act dfa of the uruguay round of multilateral trade negotiations using the computable general equilibrium model used in nguyen perroni and wigle i 9ib section ii gives a very brief overview of the dfa and the following sections explain how we represent the agreement in our model section v then describes the estimated impacts of the dfa with some discussion of the various components of the deal in section vi finally we give some concluding remarks our earlier analysis looked at a more ambitious conclusion of the uruguay round where agricultural liberalisation and textiles liberalisation were more complete in that study we found that the comprehensive uruguay round agreement generated wide spread gains to industrial countries as well as middle and low income countries we also found that the gains were largest for the two parties for whom the round seems most contentious the us and ec our analysis of a uruguay round agreement based on the dfa suggests a similar conclusion although changes since our earlier paper market opening in the economies in transition in particular have meant that the gains to eastern europe are likely to be significantly greater than before the gains to the us are still significant although much smaller than from the comprehensive agreement studied earlier and world wide gains are in the same order of magnitude at over 200 billion some discussion of our results follows in section v

viewpoint innovations in the theory and practice of redistribution policy we present a survey of key results from second best optimal redistribution theory and their implications for tax transfer policy the core results include the corlett hague theorem the deaton conditions the production efficiency theorem the atkinson stiglitz theorem and the mirrlees saez characterization of the optimal non linear income tax system these have been augmented in recent years by optimal participation tax rates the implications of involuntary unemployment the use of unconventional instruments such as minimum wages in kind transfer and workfare and the optimal taxation of capital income and bequests l auteur presente un survol des principaux resultats theoriques de la redistribution optimale de second ordre et de leurs implications pour les politiques d imposition et de transferts les resultats fondamentaux incluent le theoreme de corlett hague les conditions de deaton les theoremes d efficacite en production le theoreme d atkinson stiglitz ainsi que la caracterisation du systeme optimal d imposition non lineaire du revenu a la mirrlees saez ces derniers resultats ont ete enrichis au cours des dernieres annees par certains autres portant sur les taux d imposition decoulant des allocations conditionnelles les implications du chomage involontaire l usage d instruments non conventionnels tels que le salaire minimum les transferts en nature le workfare ainsi que l imposition optimale des revenus du capital et des legs ces resultats sont exposes et leurs implications pour les politiques d imposition et de transferts sont discutees

individual morality and reputation costs as deterrents to tax evasion abstract empirical evidence suggests some taxpayers never evade evasion increases with the tax rate and evasion decisions are interdependent these findings are not easily explained by the existing theory which models evasion as an independently made amoral gamble this paper uses nonpecuniary costs of evasion to reconcile theory with evidence once individuals are assumed to differ by an honesty characteristic taxpayers dichotomise into groups the more honest of which responds to a tax change as the evidence suggests a further extension is to introduce an endogenous reputation cost this suggests a positive relationship between the number of evaders and the tax rate

the cyclicality of r d investment revisited in fabrizio and tsolmon review of economics and statistics 2014 96 4 662 675 and barlevy american economic review 2007 97 4 1131 1164 it was concluded that r d investments are procyclical fabrizio and tsolmon utilized a model based on barlevy but it differed in some respects and allowed for more heterogeneity however we doubt whether their implied trends are intended fabrizio and tsolmon also set missing values for r d equal to zero leading to unrealistic jumps in investment and its first differences we reconcile and replicate both the fabrizio and tsolmon and barlevy papers by considering extensions that encompass both models furthermore we treat missing values more appropriately and consider some alternative specifications to check the robustness of the results procyclicality is confirmed but we find much less heterogeneity than fabrizio and tsolmon did in particular obsolescence and patent effectiveness are no longer important but external financing is

tariffication and welfare in a differentiated duopoly converting non tariff barriers such as quotas into tariffs has been referred to as tariffication and is one of the most important outcomes of the uruguay round due to the burgeoning trend of free trade agreements around the world tariffication has also been popular among asian economies by utilising a duopoly model with heterogeneous products this paper compares the efficiency of three tariffication schemes a quota is converted into an import volume equivalent tariff import price equivalent tariff or profit equivalent tariff it is found that tariffication always increases the world welfare no matter which equivalent tariff is adopted by the domestic government this result echoes the spirit of tariffication proposed by the wto and explains why more and more countries are using tariffs instead of nontariff barriers if we further assume that the quota rent equals the tariff revenue the domestic welfare will also increase after tariffication by contrast the domestic firm s profit can be higher or lower after tariffication depending on the tariffication schemes finally the foreign firm is always worse off

tariffs quotas and market structure this paper examines the effects of tariffs and quotas on the pricing pattern of producers in the case of duopoly by a domestic monopolist and a foreign monopolist it is pointed out that tariffs and quotas may induce completely different pricing patterns in the two producers under a quota it is always profitable for the home producer to be a price leader and for the foreign producer to be a follower whereas under a tariff either producer may become a leader it is also proved that whatever leader follower relation is chosen under a tariff a quota always bring about a higher domestic price than the tariff as long as both permit the same amount of imports

an empirical examination of the procyclicality of r d investment and innovation abstract the schumpeterian opportunity cost hypothesis predicts that firms concentrate innovative activities in recessions however empirical evidence suggests that innovative activities are procyclical theory proposes that firms shift r d investments and innovation from recessions to booms to maximize returns by capturing high demand periods before imitators compete away rents this paper provides the first empirical test of these predictions results indicate that r d spending is more procyclical in industries with faster obsolescence where matching invention to demand is more valuable and innovation is more procyclical in industries with weaker ip protection where imitation poses a greater threat

income distribution and equilibrium multiplicity in a stigma based model of tax evasion abstract this paper incorporates continuous income distribution into the stigma based model of tax compliance the paper investigates the effect of income distribution on the existence of multiple equilibria and characterizes the conditions under which multiple equilibria emerge precisely multiple equilibria exist if taxpayer incomes are sufficiently homogeneous because the social coordination effect dominates the individual characteristics effect numerical simulations show that the main proposition is robust to allowing two step audit policies on the part of the tax agency under the presumption that the best or good equilibrium is selected whenever there are multiple equilibria as a byproduct the effect of various forms of tax reforms on the optimal two step audit policy the equilibrium compliance and fiscal revenue is analyzed

productivity growth and the structure of the business cycle abstract over the recent years opportunity cost oc models of growth have argued that recessions are times when firms engage in productivity improving activities because of intertemporal substitu tion this paper tests whether this approach is correct the technique used to disentangle the trend from the cycle is semi structural vector autoregression the results are mildly supportive of the oc theory there tends to be a negative impact of demand shocks on productivity both in the short run and in the long run and the short run impact is stronger in those countries where fluctuations are more transitory however there is no significant response of r d to demand shocks

tax structure and government expenditures with tax equity concerns abstract we augment a standard tax model by concerns about tax equity people get upset when labour is taxed more heavily than capital even the slightest concern for tax equity invalidates the common tenet that capital remains tax exempt in small open economies this holds for exogenous as well as for endogenous government expenditures and irrespective of whether concerns with tax equity only cause emotional discomfort or also impact on work incentives if concerns with tax equity get more intense the economy may choose higher taxes on labour and move to the downward sloped part of its laffer curve for endogenous government spending stronger concerns with tax equity may lead to a larger size of the public sector

tariffs vs quotas under duopoly of heterogeneous goods abstract this paper analyzes a model of duopoly with heterogeneous goods where behavior patterns are endogenously determined by producers it is shown that the source of non equivalence of tariffs and quotas is not the monopolistic behavior of the domestic producer over consumers but a certain kind of his behavior against the foreign producers this result is then extended to the cases of a general nash type oligopoly and monopolistic competition the paper also examines how the behavior patterns of the producers are affected by tariffs and quotas and proves non equivalence of tariffs and quotas in the duopoly situation where the pricing behavior of the producers is endogenously determined by trade policies

the impact of public transfer expenditures on tax evasion an experimental approach abstract this paper outlines the methodology and results of an experiment undertaken to analyze primarily the impact of public sector transfer payments on tax evasion behaviour apart from the use of transfer payments further explanatory variables used were income expected auditing probability and perceived tax burden the influence of these variables on both the propensity to evade taxes and the extent of taxes evaded are investigated in an attempt to add more realism some innovative changes to the experimental approach were incorporated

an empirical test for tax evasion this paper develops a methodology that uses microeconomic data from individual tax returns to test for the presence of tax evasion the test is then applied to a large sample of taxpayers drawn from the u s treasury tax file for 1977 the frequency of evasion indicated by the test is significantly greater than zero and within the wide range that other evidence suggests is the extent of evasion the associations between evasion and characteristics of the taxpayer such as marginal tax rate income age and marital status are also investigated and compared to the findings of earlier studies

walking inside the potential tax evader s mind tax morale does matter we conduct an empirical study on the determinants of the psychological costs of tax evasion also known as tax morale as a preliminary step we build a model of tax evasion including non monetary considerations show the relationship between tax compliance and tax morale in the empirical analysis of tax morale we find using a binomial logit model that the justification of tax evasion can be explained by the presence of grievance in absolute terms those who feel that taxes are too high those who feel that public funds are wasted and those who accept underground economic activities and grievances in relative terms the suspected level of others tax evasion the sense of duty and the level of solidarity are also relevant factors but to a lesser extent

income tax evasion labour supply and the equity efficiency tradeoff abstract this paper is an attempt to incorporate tax evasion into the analysis of optimum income taxation a model of variable labour supply with tax evasion is used to derive supply functions for labour in regular and irregular markets given taxpayer behaviour the government chooses tax rates penalties and the probability of detection to maximize a utilitarian social welfare function the results consist in the derivation of a formula for the optimum marginal tax rate and a characterization of the factors determining the choice between the penalty rate and the probability of detection as instruments for the control of tax evasion

tax evasion and orders of risk aversion abstract the classic allingham and sandmo s journal of public economics 1 1972 323 338 portfolio choice approach to income tax evasion has been increasingly criticised because it requires an excess degree of risk aversion to explain the observed rate of tax compliance in this paper we argue that there may not necessarily be excess risk aversion and that the evidence can be explained by the distinction between orders of risk aversion as defined by segal and spivak journal of economic theory 51 1990 111 125 and considered in regard to the same problem of anomalous excess risk aversion in financial and insurance markets

on the equivalence of tariffs and quotas under duopoly abstract the purpose of this paper is to use a conjectural variation approach to examine the equivalence of tariffs and quotas set so as to result in the same equilibrium quantity of imports we have demonstrated that whether tariffs and quotas are equivalent depends crucially upon the particular value of the conjectural variations specifically in the case of equal import tariffs and quotas the equivalence holds only in the cournot case otherwise the domestic price is lower or higher under quotas depending upon whether competition is less or more competitive than cournot

tax evasion is not a gamble a report on two experiments abstract a tax evasion experiment and an equivalent gambling experiment indicate that contrary to the standard model of evasion tax evasion and gambling are quite different although the standard model provides a good basis for analysis of evasion

happiness and tax morale an empirical analysis abstract this paper presents empirical evidence that tax morale taxpayers intrinsic motivation to pay taxes constitutes a new determinant of happiness even after controlling for several demographic and socioeconomic factors using data on italian households for 2004 we assess the strength of tax morale by relying on single items as well as composite multi item indices our main result that fiscal honesty generates a higher hedonic payoff than cheating is in line with harbaugh et al 2007 s neuroeconomic finding further it sheds light on the well known puzzle of compliance that is the fact that many individuals pay taxes even when expected penalty and audit probability are extremely low tax compliance is less puzzling once we show that not only it is materially costly but also provides sizeable non pecuniary benefits that make it rewarding in itself

innovative activity over the business cycle this paper examines cyclical patterns of innovative activity in the united kingdom over the period 1948 83 innovative activity turns out to have many of the properties of a random walk but does show a tendency to cluster during booms there is clear evidence of a long term secular relation between the level of innovative activity and the level of economic activity although this may have changed in the 1980s finally the data provide no reason for thinking that these clusters of innovation cause cyclic variations in economic activity but variations in economic activity do granger cause changes in innovative activity copyright 1995 by royal economic society

a fairness approach to income tax evasion abstract the tax that a taxpayer wishes to evade is determined on the basis of his perception of the fairness of his fiscal treatment with respect to both governmental supply of public goods and the perceived behaviour of other taxpayers the coercive powers of the state and the taxpayer s attitude toward risk determine the extent to which this desired level is undertaken in practice this approach is able to produce implications for the relationship between public expenditure tax rates and tax evasion which are more consistent with empirical evidence than the results of the conventional portfolio choice approach