Taking the high road? Compliance with commuter tax allowances and the role of evasion spillovers

Jörg Paetzold and Hannes Winner

Journal of Public Economics, 2016, vol. 143, issue C, 1-14

Abstract: This paper provides evidence of evasion in the context of a widely used commuter tax allowance, and explores evasion spillovers as a determinant of the individual compliance decision. For this purpose, we exploit discontinuities in the commuter allowance scheme and employ a research design resting on a large panel of individual tax returns. We find that around 30% of all allowance claims are overstated and, consistent with deliberate tax evasion, we observe sharp reactions of taxpayers to thresholds where the allowance discretely jumps to a higher amount. Further, we use variation in job changes to uncover spillover effects from the work environment on the individual compliance decision. These effects appear to be asymmetric: Job changers moving to companies with a higher fraction of cheaters increase their cheating. In contrast, movers to companies with a lower fraction of cheaters tend not to alter their reporting behavior. We provide suggestive evidence that the spillover has more to do with an information environment, but can ultimately not reject other behavioral explanations such as asymmetric persistence of norms.

Keywords: Tax evasion; Self-reporting; Tax deductions; Spillover effects (search for similar items in EconPapers)
JEL-codes: D83 H24 H26 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (27)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0047272716300901
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Taking the High Road? Compliance with Commuter Tax Allowances and the Role of Evasion Spillovers (2016)
Working Paper: Taking the High Road? Compliance with commuter tax allowances and the role of evasion spillovers (2014)
Working Paper: Taking the High Road? Compliance with Commuter Tax Allowances and the Role of Evasion Spillovers (2014)
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:eee:pubeco:v:143:y:2016:i:c:p:1-14

DOI: 10.1016/j.jpubeco.2016.08.001

Access Statistics for this article

Journal of Public Economics is currently edited by R. Boadway and J. Poterba

More articles in Journal of Public Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().