Working Paper: NBER ID: w21185
Authors: Lorenzo Casaburi; Ugo Troiano
Abstract: The incentives of political agents to enforce tax collection are key determinants of the levels of compliance. We study the electoral response to the Ghost Buildings program, a nationwide anti-tax evasion policy in Italy that used innovative monitoring technologies to target buildings hidden from tax authorities. The program induced monetary and non-monetary benefits for non-evaders. A one standard deviation increase in town-level program intensity leads to a 4.8 percent increase in local incumbent reelection rates. In addition, these political returns are higher in areas with lower tax evasion tolerance and with higher efficiency of public good provision, implying complementarity among enforcement policies, the underlying tax culture, and the quality of the government.
Keywords: tax evasion; electoral response; public goods; Italy
JEL Codes: D72; H26
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Intensity of the ghost buildings program (R38) | Likelihood of incumbent reelection (D72) |
| Lower tax evasion tolerance (H26) | Greater electoral returns (D72) |
| Higher public good provision efficiency (H42) | Greater electoral returns (D72) |
| Higher registration rates of ghost buildings (R38) | Likelihood of reelection (D72) |
| Social preferences (D71) | Political returns (D72) |