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Tax Return as a Political Statement

Author

Listed:
  • Libman Alexander
  • Schultz André

    (Department of Economics, Frankfurt School of Finance & Management, Frankfurt am Main, Germany)

  • Graeber Thomas

    (University of Bonn, Bonn, Germany)

Abstract

This paper investigates the drivers of tax honesty of high-ranking politicians and bureaucrats in a developing country with a predatory tax system and an autocratic political regime. We argue that in this environment, high-ranking officials may report their income truthfully in order to send a credible signal of their strength to the political leadership, indicating that they are more costly to fire. This is because, in the setting that we study, tax honesty paradoxically increases the risks for taxpayers, making them more transparent and therefore vulnerable to the attacks of their opponents (especially in law enforcement agencies); only powerful officials can survive these attacks. We test our argument using a unique dataset of the tax returns filed by the Russian regional governors and members of their families for the year 2009.

Suggested Citation

  • Libman Alexander & Schultz André & Graeber Thomas, 2016. "Tax Return as a Political Statement," Review of Law & Economics, De Gruyter, vol. 12(2), pages 377-445, July.
    • Handle: RePEc:bpj:rlecon:v:12:y:2016:i:2:p:377-445:n:1
    DOI: 10.1515/rle-2014-0017
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    References listed on IDEAS

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