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Taking the High Road? Compliance with Commuter Tax Allowances and the Role of Evasion Spillovers

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  • Jörg Paetzold
  • Hannes Winner

Abstract

We provide first field evidence on evasion spillovers as an important determinant of the individual compliance decision. Exploiting discontinuities in a self-reported commuter tax allowance, we observe a substantial share of taxpayers misreporting their claims. Using exogenous variation in job changes we find that individual evasion decisions are in uenced by the compliance behavior of other co-workers, with job changers from low- to high-cheating companies starting to evade much more after they move. In contrast, movers from high- to low-cheating companies do not alter their reporting. The most likely explanation is information transmission, including increased knowledge about the possibilities for non-compliance.

Suggested Citation

  • Jörg Paetzold & Hannes Winner, 2014. "Taking the High Road? Compliance with Commuter Tax Allowances and the Role of Evasion Spillovers," NRN working papers 2014-11, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
  • Handle: RePEc:jku:nrnwps:2014_11
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    Cited by:

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    2. Kühne, Daniela, 2020. "Reaction to ambiguity as a signal for tax reporting aggressiveness: Evidence from German income tax return data," Passauer Diskussionspapiere, Betriebswirtschaftliche Reihe B-44-20, University of Passau, Faculty of Business and Economics.
    3. Wolfgang Frimmel & Martin Halla & Jörg Paetzold, 2019. "The Intergenerational Causal Effect of Tax Evasion: Evidence from the Commuter Tax Allowance in Austria," Journal of the European Economic Association, European Economic Association, vol. 17(6), pages 1843-1880.
    4. Di Gioacchino, Debora & Fichera, Domenico, 2020. "Tax evasion and tax morale: A social network analysis," European Journal of Political Economy, Elsevier, vol. 65(C).
    5. Heuermann, Daniel F. & Assmann, Franziska & vom Berge, Philipp & Freund, Florian, 2017. "The distributional effect of commuting subsidies - Evidence from geo-referenced data and a large-scale policy reform," Regional Science and Urban Economics, Elsevier, vol. 67(C), pages 11-24.
    6. Bastani, Spencer & Giebe, Thomas & Miao, Chizheng, 2020. "Ethnicity and tax filing behavior," Journal of Urban Economics, Elsevier, vol. 116(C).
    7. James Alm, 2019. "What Motivates Tax Compliance?," Journal of Economic Surveys, Wiley Blackwell, vol. 33(2), pages 353-388, April.
    8. Annette Alstadsæter & Wojciech Kopczuk & Kjetil Telle, 2019. "Social networks and tax avoidance: evidence from a well-defined Norwegian tax shelter," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(6), pages 1291-1328, December.
    9. Ina Blind & Matz Dahlberg & Gustav Engström & John Östh, 2018. "Construction of Register-based Commuting Measures," CESifo Economic Studies, CESifo, vol. 64(2), pages 292-326.
    10. Paetzold, Jörg, 2019. "Do commuting subsidies increase commuting distances? Evidence from a Regression Kink Design," Regional Science and Urban Economics, Elsevier, vol. 75(C), pages 136-147.
    11. Riedel, Nadine & Strohmaier, Kristina & Lediga, Collen, 2019. "Spatial Tax Enforcement Spillovers: Evidence from South Africa," VfS Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy 203500, Verein für Socialpolitik / German Economic Association.
    12. Bohne, Albrecht & Nimczik, Jan Sebastian, 2017. "Learning Dynamics in Tax Bunching at the Kink: Evidence from Ecuador," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168145, Verein für Socialpolitik / German Economic Association.
    13. Bohne, Albrecht & Nimczik, Jan Sebastian, 2018. "Information Frictions and Learning Dynamics: Evidence from Tax Avoidance in Ecuador," IZA Discussion Papers 11536, Institute of Labor Economics (IZA).
    14. Joerg Paetzold, 2019. "How do taxpayers respond to a large kink? Evidence on earnings and deduction behavior from Austria," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(1), pages 167-197, February.

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    More about this item

    Keywords

    Tax Evasion; Self-Reporting; Spillover Effects; Information Frictions;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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