The Optimal Number of Tax Audits: Evidence from Italy

Daniele Spinelli, Paolo Berta and Alessandro Santoro

No 497, Working Papers from University of Milano-Bicocca, Department of Economics

Abstract: Tax audits are the main tool adopted by tax administrations to collect taxes. Their optimal number depends on two parameters, i.e. the enforcement elasticity of tax revenue with respect to the audit effort and the sum of private compliance costs and public administrative costs entailed by audits. In turn, the enforcement elasticity critically depends on audit selection criteria actually chosen by tax authorities. In this paper, we apply a machine learning approach to Italian data and we provide evidence that, in 2010 and 2011, audited taxpayers are those whose reporting behaviour in between the report year and the audit year has deviated from the business cycle. We use these audit criteria to match audited taxpayers to non-audited ones and we obtain an estimate of the enforcement elasticity that allows us to characterize the optimal number of tax audits as a function of the ratio between private compliance and public administrative costs.

Keywords: Optimal Tax Administration; Enforcement Elasticity of Tax Revenue. (search for similar items in EconPapers)
JEL-codes: C55 H26 (search for similar items in EconPapers)
Pages: 41
Date: 2022-04, Revised 2022-04
New Economics Papers: this item is included in nep-acc, nep-eur and nep-pbe
References: Add references at CitEc
Citations:

Downloads: (external link)
http://repec.dems.unimib.it/repec/pdf/mibwpaper497.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:mib:wpaper:497

Access Statistics for this paper

More papers in Working Papers from University of Milano-Bicocca, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Matteo Pelagatti ().