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Voluntary Disclosure of Evaded Taxes - Increasing Revenues, or Increasing Incentives to Evade?

Listed author(s):
  • Langenmayr, Dominika

Many countries apply lower fines to tax evading individuals when they voluntarily disclose the tax evasion they committed. I model such voluntary disclosure mechanisms theoretically and show that while such mechanisms increase the incentive to evade taxes, they nevertheless increase tax revenues net of administrative costs. I then test the effects of voluntary disclosure in two separate empirical analyses. First, I confirm that voluntary disclosure mechanisms increase tax evasion, using the introduction of the 2009 offshore voluntary disclosure program in the U.S. for identification. Second, I quantify the tax revenues of voluntary disclosures by considering how some state-level governments in Germany bought whistle-blower data from foreign bank employees, thereby increasing the detection probability and the usage of voluntary disclosures.

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File URL: https://epub.ub.uni-muenchen.de/21359/7/Langenmayr.pdf
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Paper provided by University of Munich, Department of Economics in its series Discussion Papers in Economics with number 21359.

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Date of creation: 12 Aug 2014
Handle: RePEc:lmu:muenec:21359
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