Inferring Tax Compliance from Pass-Through: Evidence from Airbnb Tax Enforcement Agreements

Andrew J. Bibler, Keith F. Teltser and Mark Tremblay
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Andrew J. Bibler: University of Nevada, Las Vegas
Keith F. Teltser: Georgia State University

The Review of Economics and Statistics, 2021, vol. 103, issue 4, 636-651

Abstract: Tax enforcement is especially costly when market participants are difficult to observe. The benefits of enforcement depend crucially on pre-enforcement compliance. We derive an upper bound on pre-enforcement compliance from the pass-through of newly enforced taxes. Using data on Airbnb listings and the platform's voluntary collection agreements, we find that taxes are paid on, at most, 24% of Airbnb transactions prior to enforcement. We also find that demand for Airbnb listings is inelastic, driving three key insights: the tax burden falls disproportionately on renters, the excess burden is small, and tax enforcement is relatively ineffective at reducing local Airbnb activity.

Date: 2021
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Working Paper: Inferring Tax Compliance from Pass-through: Evidence from Airbnb Tax Enforcement Agreements (2019)
Working Paper: Inferring Tax Compliance from Pass-through: Evidence from Airbnb Tax Enforcement Agreements (2018)
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