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Cautionary tales: Celebrities, the news media, and participation in tax amnesties

Marcel Garz () and Verena Pagels

Journal of Economic Behavior & Organization, 2018, vol. 155, issue C, 288-300

Abstract: This study investigates whether press coverage on celebrities with tax issues affects the behavior of other tax payers. We compile an original data set for Germany, including regional information on the amount of tax payers using amnesty regulations to voluntarily disclose taxes they have evaded. The data set also includes counts of news reports published by 6 national and 54 local newspapers that address celebrity tax evaders who were publicly tried between January 2010 and June 2016. We find a strong correlation between the amount of self-denunciations and the news coverage. To identify the causal effect, we use exogenous variation in the reporting, resulting from disasters and terrorist attacks that coincide with the celebrity trials. Instrumental variable estimates suggest that an increase in news coverage by the amount of an average trial raises participation in the tax amnesty program by approximately 22.5%. This finding helps to better understand the effectiveness of tax amnesties, and it illustrates the economic implications of publicly trying famous personalities.

Keywords: News coverage; Public trial; Self-denunciation; Tax evasion (search for similar items in EconPapers)
JEL-codes: D83 H26 K34 L82 (search for similar items in EconPapers)
Date: 2018
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Working Paper: Cautionary Tales: Celebrities, the News Media, and Participation in Tax Amnesties (2017) Downloads
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DOI: 10.1016/j.jebo.2018.09.001

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Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

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