Abstract

http://ssrn.com/abstract=2109500
 
 

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Tax Evasion Across Industries: Soft Credit Evidence from Greece


Nikolaos T. Artavanis


University of Massachusetts at Amherst, Isenberg School of Management

Adair Morse


University of California, Berkeley - Haas School of Business

Margarita Tsoutsoura


University of Chicago - Booth School of Business

March 21, 2015

Chicago Booth Research Paper No. 12-25
Fama-Miller Working Paper

Abstract:     
We show that in semiformal economies, banks lend to tax-evading individuals based on the bank's perception of the individual's true income. This observation leads to a novel approach to estimate tax evasion using the adaptation of the private sector to the norms of semiformality. We use bank microdata on household credit, and replicate the bank model of credit capacity decision to infer the bank’s estimate of individuals’ true income. We estimate a lower bound of 28.2 billion euros of unreported income for Greece. The foregone government revenues amount to 32% of the deficit for 2009. Primary tax-evading industries are medicine, law, engineering, education, and media. We provide evidence that tax evasion persists not because the tax authorities are unaware, but because of a lack of paper trail and political willpower. Finally, we speak to the reproducibility and applicability of our private data method in other semiformal settings.

Number of Pages in PDF File: 62


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Date posted: July 17, 2012 ; Last revised: April 25, 2015

Suggested Citation

Artavanis, Nikolaos T. and Morse, Adair and Tsoutsoura, Margarita, Tax Evasion Across Industries: Soft Credit Evidence from Greece (March 21, 2015). Chicago Booth Research Paper No. 12-25; Fama-Miller Working Paper. Available at SSRN: http://ssrn.com/abstract=2109500 or http://dx.doi.org/10.2139/ssrn.2109500

Contact Information

Nikolaos T. Artavanis
University of Massachusetts at Amherst, Isenberg School of Management ( email )
121 Presidents Drive
Amherst, MA 01003
United States
Adair Morse
University of California, Berkeley - Haas School of Business ( email )
545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States
Margarita Tsoutsoura (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
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