Targeting occupations with varying reputations to increase tax revenue
If the government's goal is to raise tax revenue in a cost-effective manner, which (if any) occupation categories could be targeted with a higher probability of an audit to yield increased revenue? Looking beyond mere opportunity to evade (e.g., self-employment) and starting from the premise that taxpayers in certain occupations evade more than others, the issue is whether these taxpayers respond to a change in the audit rate. Theory suggests that compliance increases in response to higher audit rates; the occupations with the higher evaders could therefore be targeted. This theory is tested by drawing a connection between occupation, reputation, and tax compliance. We assume that taxpayers in occupations with high need for reputation respond to a lower extent to increased tax audits than taxpayers whose achievement does not depend on reputation. The results support the effectiveness of raising tax revenue by targeting specific occupations, non-managers, with a higher probability of an audit.
Year of publication: |
2010
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Authors: | Forest, Adam ; Kirchler, Erich |
Published in: |
Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics). - Elsevier, ISSN 2214-8043. - Vol. 39.2010, 3, p. 400-406
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Publisher: |
Elsevier |
Keywords: | Deterrence Occupation Ordered probit Reputation Tax compliance Tax evasion |
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