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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