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The Intergenerational Causal Effect of Tax Evasion: Evidence from the Commuter Tax Allowance in Austria

Wolfgang Frimmel (), Martin Halla () and Joerg Paetzold ()

No 2018-1, Working Papers in Economics from University of Salzburg

Abstract: Does tax evasion run in the family? To answer this question, we study the case of the commuter tax allowance in Austria. This allowance is designed as a step function of the distance between the residence and the workplace, creating sharp discontinuities at each bracket threshold. It turns out that the distance to the next higher bracket is a strong determinant of compliance. The match of different administrative data sources allows us to observe actual compliance behavior with little error at the individual level across two generations. To identify the intergenerational causal effect in tax evasion behavior, we use the paternal distance to next higher bracket as an instrumental variable for paternal compliance. We find that paternal non-compliance increases children’s non-compliance by about 23 percent.

Keywords: Tax evasion; tax morale; intergenerational correlation; intergenerational causal effect (search for similar items in EconPapers)
JEL-codes: A13 D14 H24 H26 J62 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-iue and nep-pbe
Date: 2017-01-19, Revised 2018-06-29
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Working Paper: The intergenerational causal effect of tax evasion: Evidence from the commuter tax allowance in Austria (2017) Downloads
Working Paper: The Intergenerational Causal Effect of Tax Evasion: Evidence from the Commuter Tax Allowance in Austria (2017) Downloads
Working Paper: The Intergenerational Causal Effect of Tax Evasion: Evidence from the Commuter Tax Allowance in Austria (2017) Downloads
Working Paper: The Intergenerational Causal Effect of Tax Evasion: Evidence from the Commuter Tax Allowance in Austria (2017) Downloads
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