Tax Incentives and Non-Compliance — Evidence from Swedish Micro Data
Public Finance Review, Forthcoming
33 Pages Posted: 15 Aug 2013 Last revised: 21 Sep 2016
Date Written: September 17, 2016
Using rich Swedish administrative panel data, we are able to observe and analyze a specific type of tax non-compliance, namely, overstatement of a self-reported dividend allowance that can reduce shareholders’ tax liability. Some 3 percent of Swedish owner-managers overstate this allowance during the period 2006-2009. Exploiting a large kink in the income tax schedule, we identify a positive and significant effect of the income tax rate on non-compliance. The estimated elasticity of non-compliance with respect to the marginal tax rate ranges from 0.5 to 0.7, depending on the specification.
Keywords: tax evasion, tax compliance, self-reporting, tax incentive
JEL Classification: H26, H24, D14
Suggested Citation: Suggested Citation