Taxes, Prisons, and CFOs: The Effects of Increased Punishment on Corporate Tax Compliance in Ecuador
This paper takes advantage of a rich firm level data set from Ecuador to analyze the effects of a reform in 2007 that introduced imprisonment for tax evasion and made a firm’s CFO liable for tax-crimes. Our dataset contains actual tax-return and financial-statement information for the universe of corporations in Ecuador from 2003 to 2007. We study the effects of higher punishment both at the intensive and extensive margins. We combine a difference-in-difference-in-difference approach with the DiNardo, Fortin and Lemieux decomposition method. This allows us to estimate the heterogeneous effects of the reform across the distribution of firms. We find that, at the intensive margin the reform led to an average 10% increase in real corporate tax payments. However, positive effects are only found at the right tail of the tax distribution (above the 75th percentile). At the extensive margin, the probability of entry into the tax-net increased, but most of the firms that entered the tax net claimed zero taxes.
|Date of creation:||Apr 2011|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.gwu.edu/~iiep/|
More information through EDIRC
References listed on IDEAS
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.:
- Klepper, Steven & Nagin, Daniel, 1989. "The Anatomy of Tax Evasion," Journal of Law, Economics and Organization, Oxford University Press, vol. 5(1), pages 1-24, Spring.
- M. Shahe Emran & Joseph E. Stiglitz, 2002.
"On Selective Indirect Tax Reform in Developing Countries,"
- Emran, M. Shahe & Stiglitz, Joseph E., 2005. "On selective indirect tax reform in developing countries," Journal of Public Economics, Elsevier, vol. 89(4), pages 599-623, April.
- Robin Boadway & Motohiro Sato, 2008.
"Optimal Tax Design and Enforcement with an Informal Sector,"
1168, Queen's University, Department of Economics.
- Robin Boadway & Motohiro Sato, 2009. "Optimal Tax Design and Enforcement with an Informal Sector," American Economic Journal: Economic Policy, American Economic Association, vol. 1(1), pages 1-27, February.
- Sergio Firpo, 2004.
"Efficient Semiparametric Estimation of Quantile Treatment Effects,"
Econometric Society 2004 North American Summer Meetings
605, Econometric Society.
- Sergio Firpo, 2007. "Efficient Semiparametric Estimation of Quantile Treatment Effects," Econometrica, Econometric Society, vol. 75(1), pages 259-276, 01.
- Powell, James L., 1984. "Least absolute deviations estimation for the censored regression model," Journal of Econometrics, Elsevier, vol. 25(3), pages 303-325, July.
- James Albrecht & Anders Bjorklund & Susan Vroman, 2003.
"Is There a Glass Ceiling in Sweden?,"
Journal of Labor Economics,
University of Chicago Press, vol. 21(1), pages 145-177, January.
- Nguyen, Binh T. & Albrecht, James W. & Vroman, Susan B. & Westbrook, M. Daniel, 2007.
"A quantile regression decomposition of urban-rural inequality in Vietnam,"
Journal of Development Economics,
Elsevier, vol. 83(2), pages 466-490, July.
- Binh Nguyen & James Albrecht & Susan Vroman & Daniel Westbrook, 2003. "A Quantile Regression Decomposition of Urban-Rural Inequality in Vietnam," Working Papers gueconwpa~03-03-31, Georgetown University, Department of Economics.
- Rajaraman, Indira, 2004. "Fiscal restructuring in the context of trade reform," Working Papers 04/7, National Institute of Public Finance and Policy.
- Vera Kononova & John Whalley, 2009.
"Recent Russian Debate on Moving from VAT to Sales Taxes and Its Global Implications,"
NBER Working Papers
15615, National Bureau of Economic Research, Inc.
- Whalley John & Kononova Vera, 2010. "Recent Russian Debate on Moving from VAT to Sales Taxes and Its Global Implications," Journal of Globalization and Development, De Gruyter, vol. 1(2), pages 1-27, December.
- José Mata & José A. F. Machado, 2005. "Counterfactual decomposition of changes in wage distributions using quantile regression," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(4), pages 445-465.
- Henrik J. Kleven & Martin B. Knudsen & Claus T. Kreiner & Søren Pedersen & Emmanuel Saez, 2010. "Unwilling or Unable to Cheat? Evidence from a Randomized Tax Audit Experiment in Denmark," NBER Working Papers 15769, National Bureau of Economic Research, Inc.
- M. Shahe Emran & Subika Farazi, 2009. "Lazy Banks? Government Borrowing and Private Credit in Developing Countries," Working Papers 2009-09, The George Washington University, Institute for International Economic Policy.
- Murray Leibbrandt & James Levinsohn & Justin McCrary, 2005.
"Incomes in South Africa since the fall of Apartheid,"
536, Research Seminar in International Economics, University of Michigan.
- Murray Leibbrandt & James Levinsohn & Justin McCrary, 2005. "Incomes in South Africa Since the Fall of Apartheid," NBER Working Papers 11384, National Bureau of Economic Research, Inc.
- Paul Carrillo & Anthony Yezer, 2008.
"Alternative Measures of Homeownership Gaps Across Segregated Neighboorhoods,"
2008-07, The George Washington University, Institute for International Economic Policy.
- Carrillo, Paul & Yezer, Anthony, 2009. "Alternative measures of homeownership gaps across segregated neighborhoods," Regional Science and Urban Economics, Elsevier, vol. 39(5), pages 542-552, September.
- Burgess, Robin & Stern, Nicholas, 1993. "Taxation and Development," Journal of Economic Literature, American Economic Association, vol. 31(2), pages 762-830, June.
When requesting a correction, please mention this item's handle: RePEc:gwi:wpaper:2011-02. 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: (Kyle Renner)
If references are entirely missing, you can add them using this form.