Tax Compliance Costs: A Business-Administration Perspective
Using instruments like information technology and paid preparation of tax returns, private taxpayers have a set of strategies to optimize their compliance cost burden. Assuming rational behavior, private businesses can be expected to choose a cost-optimal administration strategy. Nevertheless, we find empirical evidence of small German businesses, in particular, using external support to an insufficient extent. According to our results, doubling the proportion of outsourced compliance activities results in cost reductions of 14.4% to 24.9%. By contrast, we do not find significant evidence for a cost reduction due to an electronic data interchange with the tax and social insurance authorities or the use of a simplified cash accounting method. Therefore, our results give reason for doubt regarding potential cost reductions that could be reached by e-filing or cash-based accounting.
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Volume (Year): 68 (2012)
Issue (Month): 2 (June)
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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.:
- Blaufus, Kay & Eichfelder, Sebastian & Hundsdoerfer, Jochen, 2011. "The hidden burden of the income tax: Compliance costs of German individuals," Discussion Papers 2011/6, Free University Berlin, School of Business & Economics.
- Marsha Blumenthal & Joel Slemrod, 1995. "The compliance cost of taxing foreign-source income: Its magnitude, determinants, and policy implications," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 2(1), pages 37-53, February.
- Bankman, Joseph, 2008. "Using Technology to Simplify Individual Tax Filing," National Tax Journal, National Tax Association, vol. 61(4), pages 773-789, December.
- Breusch, T S & Pagan, A R, 1979. "A Simple Test for Heteroscedasticity and Random Coefficient Variation," Econometrica, Econometric Society, vol. 47(5), pages 1287-1294, September.
- Alm, James, 1996. "What Is an "Optimal'"Tax System?," National Tax Journal, National Tax Association, vol. 49(1), pages 117-33, March.
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