Reducing evasion through self-reporting: Evidence from charitable contributions
Journal of Public Economics, 2018, vol. 165, issue C, 31-47
In absence of third-party reporting, taxpayers are required to self-report information with various degrees of detail, ranging from uncorroborated claims to comprehensive records with receipts. Using a quasi-experimental design applied to noncash charitable contribution deductions, I show that even basic self-reporting requirements are effective at reducing evasion but impose large compliance costs on taxpayers. I find that simplified reporting requirements reduce reporting costs by $55 per person and substantially increase claimed donations. However, half of the new donations are due to evasion. Thus, information reporting should only be imposed on total reported donations above a pre-specified threshold.
Keywords: Information reporting; Evasion; Compliance cost; Tax filing; Charitable giving (search for similar items in EconPapers)
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