Combating overreporting of deductions in tax returns: prefilling and restricting the deductibility of expenditures

Fochmann M, Hechtner F, Kölle T, Overesch M (2021)

Publication Language: English

Publication Type: Journal article

Publication year: 2021

Journal

Journal of Business Economics Springer

Pages Range: 935-965

DOI: 10.1007/s11573-020-01024-7

Abstract

We experimentally analyze three anti-tax-evasion mechanisms: (1) prefilling of deductions in tax returns, (2) restricting tax evasion opportunities by either disallowing or (3) limiting the deductibility of expenditures. We find that prefilling compared to blank forms reduces tax evasion. Cutting the number of tax evasion opportunities by disallowing the deductibility of expenditure items is an ineffective mechanism to combat tax evasion as individuals shift their tax evasion activities from the disallowed item to other non-restricted items. In contrast, our results suggest that just limiting the deductibility of expenditures avoids this evasion-shift-effect.

Authors with CRIS profile

Frank Hechtner Lehrstuhl für Betriebswirtschaftliche Steuerlehre

Involved external institutions

Universität zu Köln DE Germany (DE) Freie Universität Berlin DE Germany (DE)

How to cite

APA:

Fochmann, M., Hechtner, F., Kölle, T., & Overesch, M. (2021). Combating overreporting of deductions in tax returns: prefilling and restricting the deductibility of expenditures. Journal of Business Economics, 935-965. https://dx.doi.org/10.1007/s11573-020-01024-7

MLA:

Fochmann, Martin, et al. "Combating overreporting of deductions in tax returns: prefilling and restricting the deductibility of expenditures." Journal of Business Economics (2021): 935-965.

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