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The Effect of Public Disclosure on Reported Taxable Income: Evidence From Individuals and Corporations in Japan

Author

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  • Makoto Hasegawa
  • Jefrey L. Hoopes
  • Ryo Ishida
  • Joel Slemrod

Abstract

The behavioral response to public disclosure of income tax returns figures prominently in policy debates about its advisability. Although supporters stress that disclosure encourages tax compliance, policy debates proceed in the absence of empirical evidence about this, and any other, claimed behavioral impact. This paper provides the first such evidence by examining the behavioral response to the Japanese tax return public notification system. The analysis suggests that, when there is a threshold for disclosure, a non-trivial number of both individual and corporate taxpayers whose tax liability would otherwise be close to the threshold will under-report so as to avoid disclosure — a response in the opposite direction from that stressed by supporters of disclosure. An analysis of corporations’ financial data offers no evidence that these companies’ taxable income declined after the end of the disclosure system.

Suggested Citation

  • Makoto Hasegawa & Jefrey L. Hoopes & Ryo Ishida & Joel Slemrod, 2013. "The Effect of Public Disclosure on Reported Taxable Income: Evidence From Individuals and Corporations in Japan," National Tax Journal, National Tax Association;National Tax Journal, vol. 66(3), pages 571-608, September.
  • Handle: RePEc:ntj:journl:v:66:y:2013:i:3:p:571-608
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Jeffrey L. Hoopes & Leslie Robinson & Joel Slemrod, 2018. "Public Tax-Return Disclosure," NBER Working Papers 24318, National Bureau of Economic Research, Inc.
    2. Erlend E. Bø & Joel Slemrod & Thor O. Thoresen, 2015. "Taxes on the Internet: Deterrence Effects of Public Disclosure," American Economic Journal: Economic Policy, American Economic Association, vol. 7(1), pages 36-62, February.
    3. Jordi Caballé & Ariadna Dumitrescu, 2016. "Disclosure of Corporate Tax Reports, Tax Enforcement, and Insider Trading," Working Papers 911, Barcelona Graduate School of Economics.
    4. Alm, James & Shimshack, Jay, 2014. "Environmental Enforcement and Compliance: Lessons from Pollution, Safety, and Tax Settings," Foundations and Trends(R) in Microeconomics, now publishers, vol. 10(4), pages 209-274, December.
    5. repec:eee:jeborg:v:140:y:2017:i:c:p:176-196 is not listed on IDEAS
    6. Ugo Troiano & Ricardo Perez-Truglia, 2015. "Tax Debt Enforcement: Theory and Evidence from a Field Experiment in the United States," 2015 Meeting Papers 134, Society for Economic Dynamics.
    7. Ugo Troiano, 2017. "Intergovernmental Cooperation and Tax Enforcement," NBER Working Papers 24153, National Bureau of Economic Research, Inc.
    8. Evers, Maria Theresia & Meier, Ina & Spengel, Christoph, 2017. "Country-by-country reporting: Tension between transparency and tax planning," ZEW Discussion Papers 17-008, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    9. Yamamura, Eiji & Ishida, Ryo, 2017. "Analysis of the implementation of information disclosure ordinances in Japan: the effect on the income of mayors and chief executives in local governments," MPRA Paper 83337, University Library of Munich, Germany.
    10. Miyazaki, Takeshi & Ishida, Ryo, 2016. "Estimating the Elasticity of Taxable Income: Evidence from Top Japanese Taxpayers," MPRA Paper 74623, University Library of Munich, Germany.
    11. Evers, Maria Theresia & Meier, Ina & Spengel, Christoph, 2014. "Transparency in financial reporting: Is country-by-country reporting suitable to combat international profit shifting?," ZEW Discussion Papers 14-015, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    12. Alm, James & Bernasconi, Michele & Laury, Susan & Lee, Daniel J. & Wallace, Sally, 2017. "Culture, compliance, and confidentiality: Taxpayer behavior in the United States and Italy," Journal of Economic Behavior & Organization, Elsevier, vol. 140(C), pages 176-196.
    13. Evers, Andrea & Hundsdoerfer, Jochen, 2014. "Country-by-Country Reporting: Eine neue Rechnungslegung über länderspezifische Wertschöpfung und Ertragsteuern?," Discussion Papers 2014/20, Free University Berlin, School of Business & Economics.
    14. Scott D Dyreng & Jeffrey L Hoopes & Jaron H Wilde, 2014. "Public pressure and corporate tax behaviour," Working Papers 1416, Oxford University Centre for Business Taxation.
    15. repec:zbw:zewexp:172786 is not listed on IDEAS

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