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‘Flattening’ tax evasion? : Evidence from the post‐communist natural experiment

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  • Randall K. Filer
  • Jan Hanousek
  • Tomáš Lichard
  • Karine Torosyan

Abstract

We analyze the response of tax evasion to the introduction of a flat tax in several transition economies. Using a novel estimator based on household level data, we show that in most of the countries studied there was no discernible effect on the measured size of unreported income following a flat tax reform. This may imply that decreases in marginal tax rates may frequently have been accompanied by a parallel deterioration in attitudes towards public services and the government in general. The countries that show a response to the flat tax reform appear to be those where satisfaction with government services increased.

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  • Randall K. Filer & Jan Hanousek & Tomáš Lichard & Karine Torosyan, 2019. "‘Flattening’ tax evasion? : Evidence from the post‐communist natural experiment," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 27(1), pages 223-246, January.
    • Handle: RePEc:bla:etrans:v:27:y:2019:i:1:p:223-246
    DOI: 10.1111/ecot.12189
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