Tax compliance and firms' strategic interdependence

Bayer, Ralph C.; Cowell, Frank

doi:10.1016/j.jpubeco.2009.07.007

Cited by 56 publications

(43 citation statements)

References 16 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…Bayer and Cowell (2009) have demonstrated that the eectiveness of compliance policy depends on whether there is eective competition or collusion among the rms in the industry.…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Tax compliance by firms and audit policy

Bayer

Cowell

2016

Research in Economics

Self Cite

View full text Add to dashboard Cite

Firms are usually better informed than tax authorities about market conditions and the potential prots of competitors. They may try to exploit this situation by under-reporting their own taxable prots.The tax authority could oset rms' informational advantage by adopting smarter audit policies that take into account the relationship between a rm's reported prots and reports for the industry as a whole. Such an audit policy will create an externality for the decision makers in the industry and this externality can be expected to aect not only rms' reporting policies but also their market decisions. If public policy takes into account wider economic issues than just revenue raising what is the appropriate way for a tax authority to run such an audit policy? We develop some clear policy rules in a standard model of an industry and show the eect of these rules using simulations.JEL: H20, H21

show abstract

“…Bayer and Cowell (2009) have demonstrated that the eectiveness of compliance policy depends on whether there is eective competition or collusion among the rms in the industry.…”

Section: Introductionmentioning

confidence: 99%

“…By coordinating 3 The result is general and does not depend on either the assumption that there are only two rms or the assumption of linear reaction functions (Bayer and Cowell, 2009). their declarations they can avoid the dilemma that both rms have an incentive to increase their declarations in order to reduce the audit probability.…”

mentioning

confidence: 95%

Tax compliance by firms and audit policy

Bayer

Cowell

2016

Research in Economics

Self Cite

View full text Add to dashboard Cite

show abstract

“…1 Empirical evidence on the performance of audit rules primarily comes from laboratory experiments. 2 The use of field data has proven to be more difficult because of the typical hidden nature of noncompliance and issues of endogeneity of the 1 Compliance behavior of firms has been studied in particular by Crocker and Slemrod (2005), Bayer and Cowell (2009) and Hoopes et al (2012). For extensive reviews of the taxation literature see Andreoni et al (1998), Alm and McKee (1998), Slemrod and Yitzhaki (2002), Slemrod (2007), Kirchler et al (2007) and Alm (2012).…”

Section: Introductionmentioning

confidence: 99%

Audit Rates and Compliance: A Field Experiment in Long-Term Care

Lindeboom

Klaauw²,

Vriend

2014

SSRN Journal

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractWe provide evidence from a large-scale field experiment on the causal effects of audit rules on compliance in a market for long-term care. In this setting care should be provided quickly and, therefore, the gatekeeper introduced ex-post auditing. Our results do not show significant effects of variations in random audit rates and switching to a conditional audit regime on the quantity and quality of applications for care. We also do not find evidence for heterogeneous effects across care providers differing in size or hospital status. Our preferred explanation for the lack of audit effects is the absence of direct sanctions for noncompliance. The observed divergence of audit rates in the conditional audit regime is the consequence of sorting and thus identifies the quality of application behavior of providers.

show abstract

“…3 We consider a continuum of individuals characterized by their willingness to pay for a good which is subject to a sales tax. Since we focus on the determination of the enforcement level, we assume for most of the paper that the tax rate is set at an exogenous level and we solve the following three-stage model.…”

Section: Introductionmentioning

confidence: 99%

Environmental Cost and Universal Service Obligations in the Postal Sector

Boldron¹,

Borsenberger²,

Cremer³

et al. 2011

Review of Network Economics

View full text Add to dashboard Cite

The objective of this paper is to understand the determinants of the enforcement level of indirect taxation in a positive setting. We build a sequential game where individuals, who di¤er in their willingness to pay for a taxed good, vote over the enforcement level. Firms then compete à la Cournot and choose the fraction of sales taxes to evade. We assume in most of the paper that the tax rate is set exogenously. Voters face the following trade-o¤: more enforcement increases tax collection but also increases the consumer price of the goods sold in an imperfectly competitive market.We obtain that the equilibrium enforcement level is the one most-preferred by the individual with the median willingness to pay, that it is not a¤ected by the structure of the market (number of …rms) and the …rms' marginal cost, and that it decreases with the resource cost of evasion and with the tax rate. We also compare the enforcement level chosen by majority voting with the utilitarian level. In the last section, we endogenize the tax rate by assuming that individuals vote simultaneously over tax rate and enforcement level. We prove the existence of a Condorcet winner and show that it entails full enforcement (i.e., no tax evasion at equilibrium). The existence of markets with less than full enforcement then depends crucially on the fact that tax rates are not tailored to each market individually.

show abstract

Tax compliance and firms' strategic interdependence

Cited by 56 publications

References 16 publications

Tax compliance by firms and audit policy

Tax compliance by firms and audit policy

Audit Rates and Compliance: A Field Experiment in Long-Term Care

Environmental Cost and Universal Service Obligations in the Postal Sector

Contact Info

Product

Resources

About