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Voluntary Disclosure of Evaded Taxes -- Increasing Revenues, or Increasing Incentives to Evade?

44 Pages Posted: 20 May 2015  

Dominika Langenmayr

Catholic University of Eichstaett-Ingolstadt; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: May 19, 2015

Abstract

Many countries apply lower fines to tax evading individuals when they voluntarily disclose the tax evasion they committed. I model such voluntary disclosure mechanisms theoretically and show that while such mechanisms increase the incentive to evade taxes, they nevertheless increase tax revenues net of administrative costs. I confirm the importance of administrative costs in a survey of German competent local tax authorities. I then test the effects of voluntary disclosure on the tax evasion decision, using the introduction of the 2009 offshore voluntary disclosure program in the U.S. for identification. The analysis confirms that the introduction of voluntary disclosure increases tax evasion.

Keywords: tax evasion, voluntary disclosure, self-reporting

JEL Classification: H260, K420, H240

Suggested Citation

Langenmayr, Dominika, Voluntary Disclosure of Evaded Taxes -- Increasing Revenues, or Increasing Incentives to Evade? (May 19, 2015). CESifo Working Paper Series No. 5349. Available at SSRN: https://ssrn.com/abstract=2607956

Dominika Irma Langenmayr (Contact Author)

Catholic University of Eichstaett-Ingolstadt ( email )

Auf der Schanz 49
Ingolstadt, D-85049
Germany

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

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