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The intergenerational causal effect of tax evasion: Evidence from the commuter tax allowance in Austria

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  • Wolfgang Frimmel

    ()

  • Martin Halla

    ()

  • Jörg Paetzold

    ()

Abstract

Does tax evasion run in the family? To answer this question, we study the case of the commuter tax allowance in Austria. This allowance is designed as a step function of the distance between the residence and the workplace, creating sharp discontinuities at each bracket threshold. The distance to these brackets is a strong determinant of compliance since it corresponds to the probability of detection. The match of different administrative data sources allows us to observe actual compliance behavior at the individual level across two generations. To identify the intergenerational causal effect in tax evasion behavior, we use the paternal distance-to-bracket as an instrumental variable for paternal compliance. We find that paternal non-compliance increases children's non-compliance by about 20 percent.

Suggested Citation

  • Wolfgang Frimmel & Martin Halla & Jörg Paetzold, 2017. "The intergenerational causal effect of tax evasion: Evidence from the commuter tax allowance in Austria," Working Papers 2017-01, Faculty of Economics and Statistics, University of Innsbruck.
  • Handle: RePEc:inn:wpaper:2017-01
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    References listed on IDEAS

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    Cited by:

    1. Cobb-Clark, Deborah A. & Dahmann, Sarah & Salamanca, Nicolas & Zhu, Anna, 2017. "Intergenerational Disadvantage: Learning about Equal Opportunity from Social Assistance Receipt," IZA Discussion Papers 11070, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    tax evasion; tax morale; intergenerational correlation; intergenerational causal effect;

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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