EconPapers    
Economics at your fingertips  
 

Reducing Evasion Through Self-Reporting: Theory and Evidence from Charitable Contributions

Alisa Tazhitdinova

MPRA Paper from University Library of Munich, Germany

Abstract: Using a quasi-experimental design, I show that self-reported information requirements are effective at reducing evasion. I use a reform that simplified the reporting rules for tax deductions of noncash charitable contributions in the U.S. to show that weaker reporting requirements led to a large increase in the reported donations but that nearly 50% of these donations were untruthful. At the same time, individuals experienced a substantial reduction in their reporting costs, an average of $82 per person. Next, I provide a theoretical framework that accounts for the observed trade-off between evasion and compliance costs to determine the optimal information requirements. I show that reporting should only be imposed on individuals with reported donations above a pre-specified threshold and that the threshold is primarily governed by the type and magnitude of cheating. Model calibrations in the case of noncash charitable donation deductions show that an optimally chosen threshold would reduce the welfare loss due to compliance and evasion by 70%.

Keywords: Information Reporting; Evasion; Compliance Cost; Tax Filing; Charitable Giving (search for similar items in EconPapers)
JEL-codes: D61 D64 H24 H26 H31 (search for similar items in EconPapers)
Date: 2015, Revised 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/81612/1/MPRA_paper_81612.pdf original version (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:pra:mprapa:81612

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().

 
Page updated 2021-04-12
Handle: RePEc:pra:mprapa:81612