Working Paper: CEPR ID: DP13688
Authors: Dina Pomeranz; Jos Vilabelda
Abstract: No modern state can exist in the long term without effective taxation. Recent research emerging from close collaboration of academics with tax authorities has shed new light on how states can build such tax capacity. Using both randomized and natural experiments, these partnerships have not only opened access to new types of data, but have also stimulated new perspectives and research questions. While much of research in public finance had historically assumed that a tax in the law is a tax that is collected, exciting new research takes an empirical look inside the black box of tax administration. It addresses issues ranging from the role of information and digitalization, to taxpayer behavior or the link between taxation and citizens’ relationship to the state. This paper provides a brief overview of some of this research, as well as practical advice for those interested in implementing research in partnership with tax authorities or other large public entities.
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Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| presence of a paper trail from VAT transactions (H25) | deterrent to tax evasion (H26) |
| information access + effective enforcement mechanisms (P14) | tax compliance (H26) |
| discrepancies in reported revenues (H27) | limited tax collection increases (H26) |
| randomized tax enforcement strategies (H26) | increased tax collection (H26) |
| increased enforcement (K42) | increased tax compliance (H26) |
| pre-announcing audits (M42) | increased tax payments (H29) |