Tax compliance under tax regime changes

Heinemann, Friedrich and Kocher, Martin G. (April 2013): Tax compliance under tax regime changes. In: International Tax and Public Finance, Vol. 20, No. 2: pp. 225-246

Abstract

In this paper we focus on the compliance effects of tax regime changes. According to the economic model of tax evasion, a tax reform should affect compliance through its impact on tax rates and incentives. Our findings demonstrate the importance of at least two further effects not covered by the traditional model: First, reform losers tend to evade more taxes after the reform. Second, a reform from a proportionate to a progressive system decreases compliance compared to a switch in the reverse direction. However, the level of compliance is generally higher under a progressive than under a proportionate regime.

• Item Type: Journal article
• Faculties: Economics; Economics > Chairs > Chair of Empirical Economics
• Subjects: 300 Social sciences > 330 Economics
• JEL Classification: C72, C91, H26
• ISSN: 1573-6970
• Language: English