Productivity and Tax Evasion

The extent of tax compliance has important implications for revenue yield, efficiency and the fairness of any tax system. Tax evasion undermines revenue collection, distorts competition, and undermines a country’s development prospects. In this paper, we investigate whether higher productivity causally leads to lower tax evasion. We first present stylized facts consistent with this view and develop a model that illustrates one potential transmission channel. Second, we test the model predictions at the firm level using the self-reported share of declared income as proxy for tax evasion for a large sample of emerging and developing economies. Our results suggests that productivity improvements by firms can lead to lower tax evasion.
Publication date: November 2019
ISBN: 9781513518619
$18.00
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This title contains information about the following subjects. Click on a subject if you would like to see other titles with the same subjects.

Economic Development , Firm Productivity , WP , average productivity , self-employment , OLS , tax purpose , evasion

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