Taxpaying response of small firms to an increased probability of audit: some evidence from Italy
AbstractIncome tax evasion by small rms has been seldom investigated mostly because of lack of data. In this paper we use a large data set produced by the Italian Revenue Agency for this project to analyse a recent policy to contrast business income tax evasion. Since 1998 Italy has adopted a method to audit small businesses (Studi di Settore), which de nes the probability of a tax audit based on presumptive and reported levels of sales. In 2007 a letter campaign was implemented by the Italian Revenue Agency aimed at reducing manipulation of reports by threatening that if the "anomaly" was repeated with the 2008 tax declaration, the probability of a thorough tax audit would have drastically increased. By using di erence in di erence with matching methods on a sample of about 50,000 treated firms and 95,000 controls, we find that the letter campaign had a positive and statistically signi cant average eff ect on treated firms. A cost-bene t analysis of the policy suggests that the letter campaign generated a net increase of revenues of about 140 million euros.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Milano-Bicocca, Department of Economics in its series Working Papers with number 251.
Date of creation: Jul 2013
Date of revision: Jul 2013
Business Taxation; Tax Compliance; Coarsened Exact Matching; Studi di Settore;
Find related papers by JEL classification:
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
- C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
This paper has been announced in the following NEP Reports:
- NEP-ACC-2013-07-28 (Accounting & Auditing)
- NEP-ALL-2013-07-28 (All new papers)
- NEP-EUR-2013-07-28 (Microeconomic European Issues)
- NEP-IUE-2013-07-28 (Informal & Underground Economics)
- NEP-PBE-2013-07-28 (Public Economics)
- NEP-PUB-2013-07-28 (Public Finance)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ralph Bayer & Frank A Cowell, 2006.
"Tax Compliance and Firms’ StrategicInterdependence,"
STICERD - Distributional Analysis Research Programme Papers
81, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Bayer, Ralph & Cowell, Frank, 2009. "Tax compliance and firms' strategic interdependence," Journal of Public Economics, Elsevier, vol. 93(11-12), pages 1131-1143, December.
- R Bayer & Frank Cowell, 2006. "Tax compliance and firms' strategic interdependence," LSE Research Online Documents on Economics 2680, London School of Economics and Political Science, LSE Library.
- Ralph-C Bayer & Frank Cowell, 2006. "Tax Compliance and Firms' Strategic Interdependence," School of Economics Working Papers 2006-09, University of Adelaide, School of Economics.
- Keith J. Crocker & Joel Slemrod, 2004.
"Corporate Tax Evasion with Agency Costs,"
NBER Working Papers
10690, National Bureau of Economic Research, Inc.
- Stefano Maria IACUS & Gary KING & Giuseppe PORRO, 2009.
"Multivariate matching methods that are monotonic imbalance bounding,"
Departmental Working Papers
2009-51, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
- Iacus, Stefano M. & King, Gary & Porro, Giuseppe, 2011. "Multivariate Matching Methods That Are Monotonic Imbalance Bounding," Journal of the American Statistical Association, American Statistical Association, vol. 106(493), pages 345-361.
- Stefano Iacus & Gary King & Giuseppe Porro, 2009. "Multivariate Matching Methods That are Monotonic Imbalance Bounding," UNIMI - Research Papers in Economics, Business, and Statistics unimi-1089, Universitá degli Studi di Milano.
- Slemrod, Joel & Blumenthal, Marsha & Christian, Charles, 2001.
"Taxpayer response to an increased probability of audit: evidence from a controlled experiment in Minnesota,"
Journal of Public Economics,
Elsevier, vol. 79(3), pages 455-483, March.
- Joel Slemrod & Marsha Blumenthal & Charles Christian, 2001. "Taxpayer response to an increased probability of audit: Evidence from a controlled experiment in minnesota," Natural Field Experiments 00332, The Field Experiments Website.
- Alessandro Santoro, 2008. "Taxpayers’Choices Under Studi Di Settore:What Do We Know And How We Can Interpret It?," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 67(2), pages 161-184, July.
- Lipatov, Vilen, 2005.
"Corporate Tax Evasion: the Case for Specialists,"
14181, University Library of Munich, Germany, revised Mar 2009.
- Henrik Jacobsen Kleven & Martin B. Knudsen & Claus Thustrup Kreiner & Søren Pedersen & Emmanuel Saez, 2011. "Unwilling or Unable to Cheat? Evidence From a Tax Audit Experiment in Denmark," Econometrica, Econometric Society, vol. 79(3), pages 651-692, 05.
- Gerlinde Fellner & Rupert Sausgruber & Christian Traxler, 2009.
"Testing Enforcement Strategies in the Field: Legal Threat, Moral Appeal and Social Information,"
Working Paper Series of the Max Planck Institute for Research on Collective Goods
2009_31, Max Planck Institute for Research on Collective Goods.
- Gerlinde Fellner & Rupert Sausgruber & Christian Traxler, 2009. "Testing Enforcement Strategies in the Field: Legal Threat, Moral Appeal and Social Information," NRN working papers 2009-23, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
- Gerlinde Fellner & Rupert Sausgruber & Christian Traxler, 2009. "Testing Enforcement Strategies in the Field: Legal Threat, Moral Appeal and Social Information," Working Papers 2009-23, Faculty of Economics and Statistics, University of Innsbruck.
- Gerlinde Fellner & Rupert Sausgruber & Christian Traxler, 2009. "Testing Enforcement Strategies in the Field: Legal Threat, Moral Appeal and Social Information," CESifo Working Paper Series 2787, CESifo Group Munich.
- Alessandro Santoro & Carlo V. Fiorio, 2011. "Taxpayer Behavior When Audit Rules Are Known: Evidence from Italy," Public Finance Review, , vol. 39(1), pages 103-123, January.
- Joel Slemrod & Caroline Weber, 2012. "Evidence of the invisible: toward a credibility revolution in the empirical analysis of tax evasion and the informal economy," International Tax and Public Finance, Springer, vol. 19(1), pages 25-53, February.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roberto Reale).
If references are entirely missing, you can add them using this form.