On Tax Evasion, Entrepreneurial Generosity and Fungible Assets

Abstract

Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. On tax evasion, entrepreneurial generosity and fungible assetsBenjamin Bittschi * (KIT Karlsruhe and ZEW Mannheim)Sarah BorglohMarch 2016 AbstractWe estimate the effects of income from various sources on charitable giving using administrative German income tax data. We demonstrate that charitable contributions are not uniformly affected by different income types. While business and capital income exhibit a positive effect, the remaining income sources do not influence charity on statistically significant levels. This exercise is not new and has been conducted for (at least) three different purposes: 1) Relying on the described results, a public finance researcher would state that business and capital income are more prone to tax evasion than the remaining income sources. 2) An entrepreneurship researcher would conclude that business owners are more generous than employees, and 3) a researcher testing the validity of the life cycle theory (or its behavioral counterpart) would refute the fungibility of income. In contrast, we argue that none of these approaches can answer the intended question if solicitation effects of fundraising or measurement error of the income sources are not taken into account. Applying a fixed effect poisson model, we demonstrate that under certain assumptions the results can have a meaningful interpretation.JEL Classification: D91, E21, H26, H41, L26

The true art of the tax deal: Evidence on aid flows and bilateral double tax agreements

“…Kersting and Kilby (), for instance, employ OLS and tobit regressions with logged ODA commitments as the dependent variable. However, consistent Tobit estimation relies on strong assumptions, including: (i) a normally distributed and homoscedastic error term; (ii) explanatory variables affecting the dependent variable equally along the extensive and intensive margin; and (iii) due to the incidental parameter problem, a FE estimation of the tobit model is not feasible (Bittschi, Borgloh, & Moessinger, ). Another strategy to keep the zero observations is followed by Dippel ().…”