Tax Professionals: Tax-Evasion Facilitators or Information Hubs? / Marco Battaglini, Luigi Guiso, Chiara Lacava, Eleonora Patacchini.

Format:

Book

Author/Creator:

Battaglini, Marco.

Contributor:

National Bureau of Economic Research.

Guiso, Luigi.

Lacava, Chiara.

Patacchini, Eleonora.

Series:

Working Paper Series (National Bureau of Economic Research) no. w25745.

NBER working paper series no. w25745

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Tax Professionals

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2019.

Summary:

To study the role of tax professionals, we merge tax records of 2.5 million taxpayers in Italy with the respective audit files from the tax revenue agency. Our data covers the entire population of sole proprietorship taxpayers in seven regions, followed over seven fiscal years. We first document that tax evasion is systematically correlated with the average evasion of other customers of the same tax professional. We then exploit the unique structure of our dataset to study the channels through which these social spillover effects are generated. Guided by an equilibrium model of tax compliance with tax professionals and auditing, we highlight two mechanisms that may be behind this phenomenon: self-selection of taxpayers who sort themselves into professionals of heterogeneous tolerance for tax evasion; and informational externalities generated by the tax professional activities. We provide evidence supporting the simultaneous presence of both mechanisms.

Notes:

Print version record

April 2019.