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

Posted: 5 Feb 2017  

Wolfgang Frimmel

University of Linz

Martin Halla

University of Innsbruck - Department of Public Finance

Jörg Paetzold

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. The distance to these brackets is a strong determinant of compliance since it corresponds to the probability of detection. The match of different administrative data sources allows us to observe actual compliance behavior at the individual level across two generations. To identify the intergenerational causal effect in tax evasion behavior, we use the paternal distance-to-bracket as an instrumental variable for paternal compliance. We find that paternal noncompliance increases children's non-compliance by about 20 percent.

Keywords: tax evasion, tax morale, intergenerational correlation, intergenerational causal effect

JEL Classification: H26, A13, H24, J62, D14

Suggested Citation

Frimmel, Wolfgang and Halla, Martin and Paetzold, Jörg, The Intergenerational Causal Effect of Tax Evasion: Evidence from the Commuter Tax Allowance in Austria. IZA Discussion Paper No. 10529. Available at SSRN: https://ssrn.com/abstract=2911467

Wolfgang Frimmel (Contact Author)

University of Linz ( email )

Altenbergerstr. 69
A-4040 Linz, Uper Austria 4040
Austria

Martin Halla

University of Innsbruck - Department of Public Finance ( email )

Innrain 52
Innsbruck, 6020
Austria

Jörg Paetzold

University of Salzburg ( email )

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