Template-Type: ReDIF-Paper 1.0
Author-Name: Kaisa Kotakorpi
Author-Name-First: Kaisa
Author-Name-Last: Kotakorpi
Author-Name: Satu Metsälampi
Author-Name-First: Satu
Author-Name-Last: Metsälampi
Author-Name: Topi Miettinen
Author-Name-First: Topi
Author-Name-Last: Miettinen
Author-Name: Tuomas Nurminen
Author-Name-First: Tuomas
Author-Name-Last: Nurminen
Title: The role of reporting institutions and image motivation in tax evasion and incidence
Abstract: We investigate effects of tax reporting mechanisms on evasion and incidence
in experimental double auction markets where counterfactual reporting and
market outcomes can be studied after convergence. There are two control
 conditions: (i) markets without taxes and (ii) markets where taxes are automatically levied. These are compared to (iii) markets with seller-reporting only
and fines paid if low-probability audit discovers evasion, to (iv) markets with
both seller- and buyer-reporting and a higher audit probability due to any gap
in the numbers reported by the seller and her customers, and to (v) markets
where, in addition, buyer-reporting is costly. The latter two mimic varying reporting incentives in the so called third-party reporting in tax enforcement. We
find that 20% of the sellers are truthful when only sellers report, but that 80%
and 66% of them are truthful under costless and costly third-party reporting,
respectively. Pricing, incidence, and reporting patterns in all treatments can
be explained by a model of lying costs with image concerns based on Gneezy
et al. (2018).

Length: 71 pages
Creation-Date: 2021-06
Publication-Status:  
File-URL: http://urn.fi/URN:ISBN:978-952-03-2034-8
File-Format: Application/pdf
File-Function: First version, 2021
Number: 2133
Classification-JEL: H21, H22, H26, D40, D44, D91
Handle: RePEc:tam:wpaper:2133