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The Indirect Effects of Auditing Taxpayers

Author

Listed:
  • Marisa Ratto

    () (Universite Paris–Dauphine (LEDa-SDFi), Paris, France)

  • Richard Thomas

    (HM Revenue & Customs, London, United Kingdom)

  • David Ulph

    (School of Economics and Finance, University of St. Andrews, Fife, Scotland, United Kingdom)

Abstract

Empirical studies suggest that the effects of tax audits are not only in terms of recovered unpaid tax (direct effect) but there are also indirect effects in terms of future better compliance that tend to outweigh the direct effect. However, current policy decisions on the allocation of investigation resources across different groups of taxpayers generally neglect the indirect effects, generating a potential resource misallocation issue. With the aim to clarify a possible mechanism through which the indirect effects work, the authors model tax compliance as a social norm and show that taxpayers’ interdependencies introduce a multiplier effect to an increase in the audit rate.

Suggested Citation

  • Marisa Ratto & Richard Thomas & David Ulph, 2013. "The Indirect Effects of Auditing Taxpayers," Public Finance Review, , vol. 41(3), pages 317-333, May.
  • Handle: RePEc:sae:pubfin:v:41:y:2013:i:3:p:317-333
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    Citations

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    Cited by:

    1. Athanasios O. Tagkalakis, 2014. "The direct and indirect effects of audits on the tax revenue in Greece," Economics Bulletin, AccessEcon, vol. 34(2), pages 984-1001.
    2. Matthew D. Rablen, 2014. "Audit Probability versus Effectiveness: The Beckerian Approach Revisited," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 16(2), pages 322-342, April.

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