An Experimental Evaluation of Tax Compliance in Denmark
Lack of compliance with tax laws jeopardizes revenue funds necessary for government services and undermines the efficiency and fairness of the tax system. Non-compliance (inaccurate reporting) can occur both because of tax evasion (deliberate fraud) and because of honest mistakes made by tax payers due to lack of information or the law being unclear. The aim of this research project is to construct ? in cooperation with the Danish Tax Administration (SKAT) ? a large-scale randomized experiment that may help to shed light on the following questions about evasion and compliance: • What is the total extent of non-compliance and tax evasion? • What is the extent and nature of heterogeneity in non-compliance and evasion? For individuals, how does compliance/evasion vary with income, opportunities to evade, and other individual characteristics? For firms, how does compliance/evasion vary with size, industry and other firm characteristics? • What are the effects of a more rigorous tax enforcement? In particular, what is the effect of an increased probability of audit on evasion? Is the effect heterogeneous across tax payers? • How well are tax payers informed about the tax law, and about tax administrators’ capability to detect fraud? • How should tax enforcement resources be allocated across individual tax payers and firms? • How many resources should be devoted to auditing? Is more auditing desirable?
You can read the Journal articles here
Property taxation and enhanced tax administration in challenging times, Claus Thustrup Kreiner.
Unwilling or Unable to Cheat? Evidence from a Tax Audit Experiment in Denmark, Econometrica, Vol. 79, No. 3 (May, 2011), 651–692, Henrik Jacobsen Kleven, Martin B.Knudsen, Claus Thustrup Kreiner, Søren Pedersen & Emmanuel Saez.