IDEAS home Printed from https://ideas.repec.org/a/sae/pubfin/v34y2006i6p663-686.html
   My bibliography  Save this article

Experimental Evidence on Mixing Modes in Income Tax Evasion

Author

Listed:
  • Ronald G. Cummings
  • Jorge Martinez-Vazquez

    (Georgia State University, Atlanta)

  • Michael McKee

    (University of Calgary, Canada)

Abstract

Taxpayers unlawfully trying to avoid income tax in most countries can mis-report a wide variety of line items, including income sources, exemptions, deductions, and credits. Such portfolio opportunities, or “modes,†for evasion raise important policy questions. For example, increasing the probability of detection in underreporting of income may increase compliance in terms of income reporting but may decrease compliance as a result of increased evasion through over reporting of deductions. It is possible that the resulting increase in revenue from the mode targeted for increased enforcement effort will be partially, or even fully, offset by deteriorating compliance in other modes. In this article, data from a series of laboratory experiments are used to investigate the compliance behavior of individuals when evasion can be accomplished via multiple items. The findings suggest that increasing enforcement for a single item may lead to revenue declines as evasion increases in other items as an offset.

Suggested Citation

  • Ronald G. Cummings & Jorge Martinez-Vazquez & Michael McKee, 2006. "Experimental Evidence on Mixing Modes in Income Tax Evasion," Public Finance Review, , vol. 34(6), pages 663-686, November.
  • Handle: RePEc:sae:pubfin:v:34:y:2006:i:6:p:663-686
    as

    Download full text from publisher

    File URL: http://pfr.sagepub.com/content/34/6/663.abstract
    Download Restriction: no

    References listed on IDEAS

    as
    1. Persson, Torsten & Tabellini, Guido, 1999. "Political economics and macroeconomic policy," Handbook of Macroeconomics,in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 22, pages 1397-1482 Elsevier.
    2. Grossman, Philip J, 1994. "A Political Theory of Intergovernmental Grants," Public Choice, Springer, vol. 78(3-4), pages 295-303, March.
    3. Brian Knight, 2004. "Legislative Representation, Bargaining Power, and the Distribution of Federal Funds: Evidence from the U.S. Senate," NBER Working Papers 10385, National Bureau of Economic Research, Inc.
    4. Alberto Porto & Pablo Sanguinetti, 2001. "Political Determinants of Intergovernmental Grants: Evidence From Argentina," Economics and Politics, Wiley Blackwell, vol. 13(3), pages 237-256, November.
    5. repec:cup:apsrev:v:83:y:1989:i:04:p:1181-1206_08 is not listed on IDEAS
    6. Salvador Barbera & Matthew O. Jackson, 2006. "On the Weights of Nations: Assigning Voting Weights in a Heterogeneous Union," Journal of Political Economy, University of Chicago Press, vol. 114(2), pages 317-339, April.
    7. Lenk, Thomas, 1999. "Bei der Reform der Finanzverfassung die neuen Bundesländer nicht vergessen!," Wirtschaftsdienst – Zeitschrift für Wirtschaftspolitik (1949 - 2007), ZBW – German National Library of Economics / Leibniz Information Centre for Economics, vol. 79(3), pages 164-173.
    8. Homburg, Stefan, 1994. "Anreizwirkungen des deutschen Finanzausgleichs," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 312-330..
    9. James M. Snyder Jr. & Michael M. Ting & Stephen Ansolabehere, 2005. "Legislative Bargaining under Weighted Voting," American Economic Review, American Economic Association, vol. 95(4), pages 981-1004, September.
    10. Thomas König & Thomas Bräuninger, 1996. "Power and Political Coordination in American and German Multi-Chamber Legislation," Journal of Theoretical Politics, , vol. 8(3), pages 331-360, July.
    11. repec:cup:apsrev:v:97:y:2003:i:03:p:471-481_00 is not listed on IDEAS
    12. Wallace E. Oates, 1999. "An Essay on Fiscal Federalism," Journal of Economic Literature, American Economic Association, vol. 37(3), pages 1120-1149, September.
    13. Pitlik, Hans & Schmid, Gunther & Strotmann, Harald, 2001. "Bargaining Power of Smaller States in Germany's Landerfinanzausgleich 1979-90," Public Choice, Springer, vol. 109(1-2), pages 183-201, October.
    14. Pitlik Hans & Schmid Günther, 2000. "Zur politischen Ökonomie der föderalen Finanzbeziehungen in Deutschland," Zeitschrift für Wirtschaftspolitik, De Gruyter, vol. 49(1), pages 100-124, April.
    15. Homburg, Stefan, 1997. "Ursachen und Wirkungen eines zwischenstaatlichen Finanzausgleichs," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 61-95.
    16. Hans Pitlik, 2004. "Zur Politischen Rationalitaet der Finanzausgleichsreform in Deutschland," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 239/2004, Department of Economics, University of Hohenheim, Germany.
    17. Gary Hoover & Paul Pecorino, 2005. "The Political Determinants of Federal Expenditure at the State Level," Public Choice, Springer, vol. 123(1), pages 95-113, April.
    18. Atlas, Cary M, et al, 1995. "Slicing the Federal Government Net Spending Pie: Who Wins, Who Loses, and Why," American Economic Review, American Economic Association, vol. 85(3), pages 624-629, June.
    19. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
    20. repec:cup:apsrev:v:48:y:1954:i:03:p:787-792_00 is not listed on IDEAS
    21. Altemeier, Jens, 1999. "Föderale Finanzbeziehungen unter Anpassungsdruck: Verteilungskonflikte in der Verhandlungsdemokratie," Schriften aus dem Max-Planck-Institut für Gesellschaftsforschung Köln, Max Planck Institute for the Study of Societies, volume 38, number 38.
    Full references (including those not matched with items on IDEAS)

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:pubfin:v:34:y:2006:i:6:p:663-686. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (SAGE Publications). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.