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Heard it Through the Grapevine: Direct and Network Effects of a Tax Enforcement Field Experiment

Author

Listed:
  • William C. Boning
  • John Guyton
  • Ronald H. Hodge, II
  • Joel Slemrod
  • Ugo Troiano

Abstract

Tax enforcement may affect both the behavior of those directly treated and of some taxpayers not directly treated but linked via a network to those who are treated. A large-scale randomized field experiment enables us to examine both the direct and network effects of letters and in-person visits on withheld income and payroll tax remittances by at-risk firms. Visited firms remit substantially more tax. Their tax preparers’ other clients also remit slightly more tax, while their subsidiaries remit slightly less. Letters have a much smaller direct effect and no network effects, yet may improve compliance at lower cost.

Suggested Citation

  • William C. Boning & John Guyton & Ronald H. Hodge, II & Joel Slemrod & Ugo Troiano, 2018. "Heard it Through the Grapevine: Direct and Network Effects of a Tax Enforcement Field Experiment," NBER Working Papers 24305, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:24305
    Note: PE
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    More about this item

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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