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Tax evasion and misreporting in income tax returns and household income surveys


  • Massimo Baldini
  • Paolo Bosi
  • Michele Lalla


This paper studies tax evasion and misreporting by comparing data from income tax files and a survey of household incomes, both relative to a medium-size Italian town. The novelty of our approach lies in the use of individual microdata, obtained by "exact matching" between the two data sources. As usual, the adopted proxy for tax evasion is the difference between survey income and tax-declared income. Our results lend support to the widely shared belief that in Italy the propensity to evade is higher among the self-employed. However, our findings do not bear out the existence, which emerged in previous studies, of a negative relationship between tax evasion and income levels. Underreporting seems to be concentrated in the lowest income deciles, while the level of tax evasion is higher at the top of the income distribution. Notwithstanding the reliability of the statistical base, our results must be accepted with caution, as the measure of tax evasion adopted is not able to make a clear distinction between evasion and misreporting.

Suggested Citation

  • Massimo Baldini & Paolo Bosi & Michele Lalla, 2009. "Tax evasion and misreporting in income tax returns and household income surveys," Politica economica, Società editrice il Mulino, issue 3, pages 333-348.
  • Handle: RePEc:mul:je8794:doi:10.1429/30792:y:2009:i:3:p:333-348

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    Cited by:

    1. Felix Schmutz, 2016. "Measuring the Invisible: An Overview of and Outlook for Tax Non-Compliance Estimates and Measurement Methods for Switzerland," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 152(II), pages 125-177, June.
    2. Paulus, Alari, 2015. "Tax evasion and measurement error: An econometric analysis of survey data linked with tax records," ISER Working Paper Series 2015-10, Institute for Social and Economic Research.
    3. Elek, Peter & Köll?, János, 2017. "Eliciting Permanent and Transitory Undeclared Work from Matched Administrative and Survey Data," IZA Discussion Papers 10800, Institute for the Study of Labor (IZA).
    4. repec:spr:sjecst:v:152:y:2016:i:2:d:10.1007_bf03399425 is not listed on IDEAS
    5. Peter Elek & Janos Kollo, 2016. "Eliciting permanent and transitory undeclared work from matched administrative and survey data," Budapest Working Papers on the Labour Market 1605, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.


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