An experimental analysis of tax avoidance policies

Samreen Malik, Benedikt Mihm, Florian Timme

Research output: Contribution to journalArticle

Abstract

Policies to reduce aggressive tax avoidance are increasingly being implemented or discussed in many countries around the world. Tax authorities hope that such policies will generate new tax revenue by increasing overall tax compliance. We present an experimental design to investigate the effect of a stylized anti-avoidance tax policy on tax compliance behavior. We highlight that anti-avoidance tax policies that reduce tax avoidance can also induce an increase in tax evasion (“substitution effect”), which limits the additional tax revenue these policies will generate. We show that the degree of substitution depends crucially on behavioral factors such as tax morale. Policymakers therefore also need to consider behavioral features while designing such policies and estimating their potential effects.

Original languageEnglish (US)
Pages (from-to)200-239
Number of pages40
JournalInternational Tax and Public Finance
Volume25
Issue number1
DOIs
StatePublished - Feb 1 2018

Fingerprint

Experimental analysis
Tax avoidance
Avoidance
Tax compliance
Tax revenues
Tax policy
Tax morale
Tax
Substitution
Authority
Politicians
Substitution effect
Factors
Tax evasion
Experimental design

Keywords

  • Aggressive tax avoidance
  • Anti-avoidance tax rules (AAR)
  • Compliance
  • Tax evasion

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

Cite this

An experimental analysis of tax avoidance policies. / Malik, Samreen; Mihm, Benedikt; Timme, Florian.

In: International Tax and Public Finance, Vol. 25, No. 1, 01.02.2018, p. 200-239.

Research output: Contribution to journalArticle

Malik, Samreen ; Mihm, Benedikt ; Timme, Florian. / An experimental analysis of tax avoidance policies. In: International Tax and Public Finance. 2018 ; Vol. 25, No. 1. pp. 200-239.
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