Estimating Tax Noncompliance among the Self-Employed – Evidence from Pleasure Boat Registers

Per Engström, Johannes Hagen () and Edvard Johansson
Additional contact information
Edvard Johansson: Åbo Akademi University

No 144, Discussion Papers from Aboa Centre for Economics

Abstract: We improve upon the Pissarides-Weber method for estimating tax evasion among the self-employed by utilizing unique register-based consumption measures from the Swedish and Finnish mandatory registers for pleasure boats. The register data allows for more detailed and statistically powered analyses than survey-based applications. We evaluate i) the key assumption of equal preferences between self-employed and wage earner households, and ii) the functional form assumptions in the estimated Engel curves. Our results indicate overall levels of hidden incomes that are roughly in line with previous studies. However, the functional form analysis shows that the estimated sizes of income underreporting in absolute monetary amounts are almost constant over reported income levels, whereas previous studies have assumed that the underreporting is proportional to income. The results from the preference analysis – in which we compare households that will become self-employed in the near future with households that will remain wage earners – are mixed; the analysis shows that the two types of households have insignificant (Finland) or economically small (Sweden) preference differences. However, when we use engine power as a price proxy, the preference differences are substantially larger in both countries.

Keywords: tax evasion; income underreporting; pleasure boats; Engel curves; permanent income; self-employment (search for similar items in EconPapers)
JEL-codes: D12 H24 H25 H26 (search for similar items in EconPapers)
Pages: 39
Date: 2021-03
New Economics Papers: this item is included in nep-eur, nep-iue and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://ace-economics.fi/kuvat/dp144.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tkk:dpaper:dp144

Access Statistics for this paper

More papers in Discussion Papers from Aboa Centre for Economics Contact information at EDIRC.
Bibliographic data for series maintained by Susmita Baulia ().