Prefilled Income Tax Returns and Tax Compliance: Evidence from a Natural Experiment

Kaisa Kotakorpi and Jani-Petri Laamanen

No 1604, Working Papers from Tampere University, Faculty of Management and Business, Economics

Abstract: Despite the adoption of prefilled tax forms in many countries, little is known about their effects on taxpayers’ reporting behaviour. We estimate the effect of the income tax filing system on taxpayers’ reporting behaviour, utilising data from a Finnish policy experiment. We find that receiving a (partially) prefilled income tax return lead to a significant reduction in non-prefilled deductions and self-reported income, and an increase in deductions that were prefilled in the new system. However, we do not find effects on individuals’ total taxable income or taxes paid. We discuss complexity and compliance costs, salience effects, and changes in the opportunities for tax evasion as possible explanations for our findings.

Keywords: income tax filing; complexity; salience; tax evasion; natural experiment (search for similar items in EconPapers)
JEL-codes: H24 H26 H31 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2016-05
New Economics Papers: this item is included in nep-iue, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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http://urn.fi/URN:ISBN:978-952-03-0150-7 First version, 2016 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:tam:wpaper:1604

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