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Cautionary tales: Celebrities, the news media, and participation in tax amnesties

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  • Garz, Marcel
  • Pagels, Verena

Abstract

This study investigates whether press coverage on celebrities with tax issues affects the behavior of other tax payers. We compile an original data set for Germany, including regional information on the amount of tax payers using amnesty regulations to voluntarily disclose taxes they have evaded. The data set also includes counts of news reports published by 6 national and 54 local newspapers that address celebrity tax evaders who were publicly tried between January 2010 and June 2016. We find a strong correlation between the amount of self-denunciations and the news coverage. To identify the causal effect, we use exogenous variation in the reporting, resulting from disasters and terrorist attacks that coincide with the celebrity trials. Instrumental variable estimates suggest that an increase in news coverage by the amount of an average trial raises participation in the tax amnesty program by approximately 22.5%. This finding helps to better understand the effectiveness of tax amnesties, and it illustrates the economic implications of publicly trying famous personalities.

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  • Garz, Marcel & Pagels, Verena, 2018. "Cautionary tales: Celebrities, the news media, and participation in tax amnesties," Journal of Economic Behavior & Organization, Elsevier, vol. 155(C), pages 288-300.
  • Handle: RePEc:eee:jeborg:v:155:y:2018:i:c:p:288-300
    DOI: 10.1016/j.jebo.2018.09.001
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    2. Avdiu, Besart & Gruhle, Tobias, 2018. "Contagion and Information Frictions in Emerging Markets: The Role of Joint Signals," VfS Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181570, Verein für Socialpolitik / German Economic Association.
    3. Aparicio, Juan P. & Jetter, Michael, 2020. "Captivating News in Colombia," IZA Discussion Papers 13834, Institute of Labor Economics (IZA).
    4. Jetter, Michael & Walker, Jay K., 2018. "The Effect of Media Coverage on Mass Shootings," IZA Discussion Papers 11900, Institute of Labor Economics (IZA).
    5. Avdiu, Besart & Gruhle, Tobias, 2018. "Contagion and information frictions in emerging markets: the role of joint signals," MPRA Paper 84872, University Library of Munich, Germany.

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    More about this item

    Keywords

    News coverage; Public trial; Self-denunciation; Tax evasion;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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