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This thesis employs Bourdieu's theory of practice to explore small immigrant business owners' adaptation to the host country's income tax system. In doing this, the thesis applies a sociological perspective in the theorizing and study of their tax compliance behaviour. Drawing on a survey (N=101) and in-depth interviews (N=27) with Bangladeshi family business owners and their tax advisers in the UK, this thesis demonstrates that immigrant business owners' engagement with the host country's tax system is grounded in the sociocultural status they inherit from their country of origin, even though their social class positions in the new society unconsciously condition and impact on how they practise tax compliance. Findings suggest that the power relations inherent in the tax professional-taxpayer relationship act as a critical factor in the reproduction and transformation of immigrant business owners' moral disposition towards compliance with tax laws. The thesis argues that the ways small Bangladeshi family business owners think, feel and act in their approach to tax compliance is likely to differ not only from those of native business communities but also from those of other immigrant communities in the UK.

This thesis seeks to analyse the impact that operating in jurisdictions with different socio-economic and legal contexts can have on taxpayer regulation. This is done by comparing large corporate taxpayers in the UK and in Colombia using empirical qualitative methods to examine the alignment between factors at different levels that can influence corporate tax behaviour, and the premises of the co-operative compliance. The main conclusion is that the factors present in Colombia are contrary to introducing this type of regulation. This is because critically-negative perceptions of the administration -particularly of its trustworthiness- corporate tax governance weaknesses, tax-risk prone social norms, and contextual factors like a high perception of corruption create an environment adverse to this model's philosophy, which is highly dependent on interparty trust and taxpayer risk aversion and compliance-mindedness. Results from the UK show that co-operative compliance can contribute to improve taxpayer governance, strengthen risk-averse and/or compliance-minded taxation norms, and encourage perceptions of the administration that are favourable for voluntary compliance. However, the evidence also shows that operational difficulties can quickly erode taxpayer trust in the administration and on the value of collaboration, and jeopardise the progress made. This is the case with administrative business understanding, responsiveness, and providing of legal certainty while maintaining the model's legitimacy and answering demands for fair and responsible outcomes. Accordingly, this thesis proposes policy measures designed to facilitate the conditions necessary for establishing co-operative compliance in contexts like Colombia's, where shifting from adversarial, non-responsive regulation towards collaborative, responsive regulation could assist in improving voluntary compliance. Additionally, the author recommends policies for enhancing co-operative compliance's sustainability in jurisdictions like the UK, where the model is developed, but the progress it has achieved needs to be protected against the trust and compliance-eroding effects arising from the regulator's difficulties in satisfying taxpayer expectations.

The objective of this study is to obtain an in-depth understanding of the practical working of property tax administration in Jamaica. It highlights the major enforcement and compliance practices along with how the invisible and underlying interactions of actors in the field shape these practices. It also explores those issues and circumstances along with the existing patterns of interests which have contributed to the continued practice of the central administration of the property tax. The study also emphasizes struggles in the property tax field between the various players: the tax authority, the politicians, the developers, the local authorities, the central government and the taxpayers and how each one uses its capital to maintain or dominate its position within the property tax field. The findings revealed that there were various tensions and struggles among the different players within property tax field in Jamaica. The players in the field used their ‘capitals’ to maintain, dominate and or attempt to make changes to the property tax rules. The findings suggest that some property tax enforcement practices were the means through which these tensions were manifested and resolved or on the other hand, the tax authority attempted to use the current practices as hidden agendas to highlight those tensions in order to stand their ground or obliquely suggest changes or even to demonstrate its tacit support of government policies. The findings also suggest that the non-localization of the property tax may be due to varied political interests, mistrust in the local authorities and also the perception by some players that there’s a lack of capital at the local level to manage the tax. Finally, taxpayers’ used their social, economic and cultural capital to resist enforcement and compliance efforts cheating the government of much needed revenues Property tax although not an important national tax is a critical source of revenue for local communities globally. An increased understanding of the working of the practices is beneficial and has implications for both taxpayers and policymakers. The three research questions posed in my study address and highlight the main property tax enforcement strategies and how the tax authority and policymakers use their capital to shape these practices; the extent to which non-localization of the property tax within the Portmore Municipality is influenced by the political dispositions of the players in the field and thirdly the dimensions of property tax compliance and non-compliance in Jamaica. The questions seek to demonstrate how the combination of the actions and interactions of tax administrators, taxpayers, politicians, developers, government bureaucrats reshape administrative practices in the property tax field which have implications for revenue generation and the provision of services. In keeping with the adoption of an interpretive inductive approach, face-to-face interviews were conducted with tax administrators, policymakers, councillors, mayors, taxpayers, members of civil society, a developer and a tax professional. A theoretical framework is created which combines the major themes and theoretical concepts within three strands of literature: tax administration, fiscal decentralization, and Bourdieu’s theory of practice. The structure provides the explanatory lens through which the findings are presented and interpreted. The study contributes to the tax scholarship through an interpretive methodical approach which gives an additional perspective on property tax administration. It answers the call for well-developed tax research dispelling the notion that tax research is adequately dealt with. This study contributes to the tax literature by demonstrating that taxation isn’t just a technical issue; that the legal framework and administrative framework don’t necessarily coincide with practice; that tax practice is shaped by the actions and interactions of players in the field, making it a social construction; that players use their power to influence property tax practice and that players actions are conditioned by their background. The study also contributes a conceptual framework for property tax practice.

Consumption taxes play a major role in revenue generation for many developing countries. They are also used to encourage or discourage certain consumption behaviors. However, the administrative aspects of implementing these taxes can create challenges for the tax authorities, and lead to distortions in taxpayer behavior. To overcome these challenges, efforts have been made to simplify policies and utilize technology to improve administration and compliance. My dissertation aims to provide empirical evidence on the effects of three consumption or commodity tax policy reforms in Indonesia. The dissertation consists of three essays as follows. In my first essay, titled “The effect of modernizing the self-enforcing “paper” trail in Value Added Tax”, I study a modernization policy under Indonesia's Value Added Tax (VAT) regime, where the government switched from a paper-based VAT invoice system to an online electronic system. To measure how the digitalization of the self-enforcing “paper” trail affects firms' behavior and revenue mobilization, I exploit a two-stage implementation that mandated the new electronic invoice system to start in July 2015 for taxpayers in 7 provinces (similar to states) and then in the rest of 27 provinces one year later. This policy creates a quasi-experimental variation that allows me to use the two-stage introduction in a generalized differences-in-differences estimation following Malkova (2018). I utilize the Indonesian tax administrative data from the monthly VAT returns filed from 2014 to 2017. I use the firms in the 7 provinces that adopted the electronic invoices early as the treatment group and the rest of firms in the 27 provinces that adopted the electronic invoices later. I find that the electronic invoices system leads to an immediate increase in taxable sales but no effect on taxable inputs, and it further translates to increased VAT liability. The impact is driven by firms’ sizes, particularly smaller firms. The effect of electronic invoices are also heterogenous under different institutional environment (tax office type) and firm’s sectors. The second essay in my dissertation, titled “Toward fewer tax audit: Evidence from Indonesia“, utilizes another VAT administrative policy reform. The existing empirical literature has primarily focused on examining the impact of a higher probability of detection or audit in a tax system. However, we have little empirical evidence on the opposite situation when the probability of detection or audit gets lower. This essay fills the gap by studying firms' behavioral response when the tax authority in Indonesia removes a mandatory audit requirement for firms claiming a refund on VAT excess payments below IDR 1 billion (around $70,000). I use a difference-in-differences estimation by exploiting the variation in the treatment at the sector level to estimate the impact of this reform. I use firms in the sectors concentrating on export activity as the treatment group and firms in the sector less concentrated on export as the control group. For this essay, I also use the Indonesian tax administrative data from the monthly VAT returns filed from 2016 to 2020. The result show that the fast-track refund led to an 11.66 percent increased taxable inputs (partially significant), but no impact on productivity (export and domestic sales) and VAT liability. Consistent with the standard tax compliance model, this increases in taxable inputs indicates that fewer audit activity may facilitate tax evasion. The third essay, titled “Tax stimulus during the COVID-19 pandemic: Evidence from Indonesia” investigates the impact of a commodity tax stimulus program on new car purchases introduced in response to the COVID-19 economic downturn. This program provides a luxury sales tax (LST) exemption for new car purchases where the eligibility requirement is based on engine sizes and domestic content ratio. My empirical design exploits comparable vehicles similar in price, type, market segment, engine sizes, and engine power but with variations in their eligibility for the program. Using event study and multi period difference-in-differences, I analyze the shift in sales number between the incentivized cars and their comparable before and during the COVID-19 pandemic. I use national-wholesale level data of monthly new vehicle purchases from January 2019 to December 2021. I find that tax stimulus increases purchases on eligible cars by 80 percent but only statistically significant at 10 percent confidence interval, which may be due to the small number of observations in my data. This translates to approximately 40 thousand additional units of eligible vehicles being purchase from April 2021 to December 2021.

This dissertation analyzes individual behavioral responses to tax policy and administration. All three chapters use administrative tax microdata to assess the intended and unintended consequences of policies whose goals are to increase tax compliance or improve tax enforcement and debt collection. Together, these essays expand our understanding of how individuals respond to the tax system, and provide empirical findings that can inform future improvements to that system. The first chapter explores a recent increase in U.S. citizenship renunciation and its connection to tax rules and enforcement. The U.S. tax system applies to its citizens’ worldwide incomes and estates, whether those citizens live in the U.S. or abroad. Fully escaping the U.S. tax system requires dropping U.S. citizenship, and in recent years a growing number of individuals have done so. I use administrative tax microdata to answer three questions: Who is renouncing U.S. citizenship? Why are they renouncing? What are the policy consequences? I show that the recent increase is mainly driven by those who have for many years lived abroad, rather than by individuals leaving the U.S., and that these renunciations are primarily a response to increased compliance costs, not tax liabilities. I also present evidence of a strong response to a net worth threshold affecting the cost of renunciation. I conclude by showing that most of those renouncing had no or little pre-renunciation U.S. tax liability, suggesting their renunciations are likely to have minimal revenue impact. Overall, the evidence shows that the tax system does affect individuals’ citizenship decisions, though renunciations are still relatively uncommon. The second chapter, co-authored with Alex Ruda, Joel Slemrod, and Alex Turk, studies the IRS’ passport certification and revocation process. Traditional penalties for tax noncompliance are financial, but many jurisdictions now also use non-monetary tools, including collateral sanctions that deny access to some government-provided service. To learn about the effectiveness of one such penalty, we examine a U.S. policy restricting passport access for taxpayers with substantial tax debt, known as “certification.” We take advantage of an RCT during the policy rollout and find small but positive effects on taxpayer compliance of the certification notice sent to all eligible taxpayers. We then study a subset of certified taxpayers who were denied a passport-related request and find an immediate and strong positive effect of the denial on compliance actions. The third chapter, co-authored with Chad Angaretis, Brian Galle, and Allen Prohofsky, studies California’s Top 500 tax delinquent publication program. Many U.S. states and countries around the world publicly disclose tax debtors to encourage compliance. Little is known about the effectiveness of these programs. Using administrative tax microdata from California’s “Top 500” disclosure program, we study whether notices of imminent publication affect payment and other compliance outcomes, as well as whether these notices affect subsequent reported earnings. We estimate the direct effect of the letter sent to the 500 highest-balance, publication-eligible taxpayers to be additional revenue of between $2.8 and $7.2 million annually, with no evidence of an impact on subsequent reported earnings. We also estimate an upper bound on the deadweight loss caused by publication of non-compliers, and conclude that the program generates positive net social welfare. Together, these results suggest that delinquent taxpayer disclosure can be an efficient tax enforcement tool, at least among the relatively high-income population we study.

The central theme of my dissertation is understanding the relationship between different types of institutions and individual behavior. The types of institutions I specifically study are tax enforcement agencies, charities, and governments. The corresponding responses I examine are tax compliance, giving, and tax sheltering. One of the Internal Revenue Services' audit methods is to select individuals engaged in transactions with other taxpayers whose tax returns were selected for audit. This joint liability in the audit mechanism introduces an externality where one's action affects the likelihood of others being audited. Therefore, it can induce different tax compliance behavior compared to the random selection audit mechanism. Chapter 1 studies the effectiveness of this group accountability audit mechanism against a purely random selection audit mechanism using a lab experiment. Data shows that tax compliance is higher in the group accountability audit mechanism than in the random selection audit mechanism. Chapter 2 uses laboratory experiments to study individual decisions on donating to a charity in response to changes in the tax rate and income in the presence of matching and two types of rebate subsidies: deterministic and stochastic. Private consumption is taxed, and contributions are subsidized such that the relative price of giving across the fundraising mechanisms is equivalent. Data shows that tax framing and rebate subsidy elicit less charitable contribution than neutral framing and matching subsidy; the negative effect on donation is smaller for stochastic than deterministic rebate subsidies. Chapter 3 examines the effect of identification with the government on tax sheltering behavior using secondary data. Individuals' attitudes towards a new government depend on whether their political preference is aligned with the elected government leader. Those who are aligned are more likely to be positive and agree with how the government uses tax revenue. On the other hand, those who are not aligned are more likely to be negative and disagree with how the tax revenue is spent. Such emotions and attitudes towards the new government may be reflected through the tax sheltering behavior. I find that charitable contribution deduction increased for counties that were not politically aligned when the presidency changed.

This dissertation consists of three essays in Public Finance and Political Economy dealing with business tax compliance in Italy and the management of natural gas infrastructures in the Greater Boston area. The first essay, co-authored with Matteo Paradisi, studies the potential role for audit rule disclosure in stimulating business tax compliance. To this end, we use administrative data from an Italian audit system known as Sector Studies. Sector Studies present small firms and the self-employed with relatively higher audit risks when reporting revenues below an idiosyncratic threshold that is revealed to the taxpayers. As a consequence, businesses respond by adjusting their reported revenues to bunch at these thresholds. Accordingly, we show in the data that bunching consistently correlates with measures of tax evasion. We thus estimate a structural model of business revenue underreporting to quantify the effect of disclosure. Relative to scenarios where audit risks are perceived to be constant, our calculations suggest that disclosure induces higher mean reported revenues without substantial welfare costs over the 2007-2010 period. We conclude that audit rule disclosure provides a relatively low-cost policy to reduce revenue underreporting even among the "hard-to-tax". The second essay investigates the effects of a 2011 reform to the Sector Studies. The policy, known as "reward regime", expanded the audit exemptions conferred to taxpayers complying with their Sector Study. While these rewards might induce a tax base rise among previously non-compliant filers, the provision of audit exemptions might still result in revenue losses on the net. Over the first six years of implementation, I show that the reform is associated with both higher mean reported revenues and gross profits in the affected sectors. These tax base gains are concentrated among taxpayers appearing non-compliant in the year before their sector's reform. The gradual roll-out of the reform also helps to illustrate the dynamics of bunching in a threshold-based, disclosed audit rule setting. Both taxpayers starting below and above their Sector Study revenue threshold before the reform reduce their distance to the threshold following the policy change. This evidence suggests that tax enforcement strategies relying on audit rule disclosure can engender both compliance-improving and -reducing behaviors, calling for close scrutiny of both individual and aggregate effects. The third essay, co-authored with Felipe Jordán Colzani, investigates the relationship between ethnic diversity and the reparation rate of natural gas leaks in Cambridge and Boston. Local diversity can reduce the ability of a community to protect its common resources by undermining collective action and an individual's attachment to the community. Using recent geocoded data on public-street gas leaks, we show that neighborhoods with higher ethno-racial and linguistic fractionalization enjoy a substantially lower share of reparations of the local leak pool. While more fractionalized communities in the data display lower levels of social capital and individual attachment, measures of the latter concepts fail to explain away our baseline correlations. Possible reasons for this puzzle may lie in the difficulty of isolating the complex social and political dynamics that connect a community to the overall state of its local infrastructure.

Praca poświęcona jest analizie zmiany obowiązującego w obszarze nauk prawnych paradygmatu dotyczącego relacji organów skarbowych i podatników. W celu przeanalizowania tej zmiany odwołano się do dorobku filozofii prawa oraz opisane zostały bodźce dla zachowywania przez podatników zgodności z przepisami prawa podatkowego. Rozprawę oparto także o dorobek ekonomicznej analizy prawa, w szczególności wykorzystując metodę komparatystyczną szacowania kosztów transakcyjnych oraz koncepcję kontraktu relacyjnego. Jako przedmiot analizy wybrano, będącą przykładem zmiany paradygmatu w relacjach organów skarbowych z podatnikami, koncepcję systemu nadzoru horyzontalnego.

This dissertation uses administrative tax data to study behavioral responses to taxation and tax enforcement. Chapter I focuses on the two tax penalties associated with Individual Retirement Accounts (IRAs). Chapter II considers the impact of a temporary suspension of tax collection efforts on future tax compliance and income. Chapter III investigates the use of professional tax preparation services by the top 1% of the income distribution. Chapter I, which is co-authored with Victoria Bryant, focuses on tax-benefited retirement savings accounts. These accounts have features designed to encourage retirement savings, including a penalty for withdrawing before age 59.5. Account holders also face a penalty for failing to take required minimum withdrawals after age 72. Using a bunching analysis, we estimate that these penalties cause more than 17% of traditional IRA holders to change their withdrawal timing each year, shifting close to $60 billion of distributions annually. We estimate a dynamic life-cycle model and run counterfactual policy analysis to analyze the effect of changing these penalties. For both penalties, we find alternative combinations of age threshold and penalty rate that lead to increased average welfare and lifetime tax remittances: increasing the age threshold for penalty-free withdrawals while simultaneously lowering the penalty rate, and increasing the age threshold for required withdrawals while leaving the penalty rate unchanged. In chapter II, which is co-authored with William C. Boning, Joel Slemrod, and Alex Turk, we ask whether a temporary suspension of efforts to collect outstanding tax debt ultimately lead to lower or higher tax compliance and income. When economic hardship prevents a tax debtor from paying basic living expenses, the Internal Revenue Service puts debt collection efforts on hold and designates the debt currently not collectible (CNC). This paper uses the quasi-random assignment of IRS Revenue Officers to tax debtors' cases as an instrumental variable to identify the causal effects of suspending debt collection on tax compliance and future income. In contrast to uninstrumented estimates, we find no evidence that putting off attempts to collect debt reduces compliance with future tax obligations or future reported income. Among marginal hardship cases, pausing collection instead increases future income, specifically wages earned by the taxpayer's spouse. Chapter III, which is co-authored with Giacomo Brusco, Yeliz Kacamak, and Mark Payne, considers a recent addition to the conversation about income inequality and the "top 1%:" the extent to which this population avoids and evades its tax liability. As the vast majority of the top 1% of the income distribution use a paid tax preparer, understanding the role of professional tax preparation services among this population is critically important to understanding their tax outcomes. We find that, among the bottom 99% of the income distribution, self-prepared returns have smaller corrections from a random audit relative to paid-prepared returns, but among the top 1%, paid-prepared returns experience smaller corrections relative to self-prepared returns. We then turn to the question of why someone in the top 1% wouldn't use paid tax preparation. We conclude that individuals in the top 1% who are either an accountant or financial advisor, or who have a higher proportion of their income from third-party reported sources such as wages, are less likely to use paid tax preparation services.

This dissertation studies the impacts of major tax reforms designed to improve tax compliance, particularly in the context of developing countries with limited enforcement capacity due to informality and lack of third-party data using the Indonesian tax administrative data as well as relevant empirical research methods. In order to describe this dissertation, I discuss each essay as the following. The first essay is titled "How Do Small Taxpayers Respond to Tax Simplification? Evidence from the Indonesian Turnover Tax Reform." This essay studies the firms' behavioral responses to tax simplification in Indonesia by exploiting the implementation of turnover tax in 2013 and the expansion of value added tax (VAT) registration threshold in 2014 as well as the fact that both turnover tax eligibility and VAT registration thresholds are at the same value. I find that firms intentionally bunch just above the threshold in order to avoid turnover tax regime. I also document that some firms started to bunch just below the threshold in order to avoid VAT registration when the threshold expanded. The results suggest that rms can face different types of notch at the same threshold and thus respond differently conditional on tax and non-tax incentives. The second essay is titled "Tax Evasion and Forgiveness: Evidence from the Indonesian Tax Amnesty Program." This essay examines the determinants of tax evasion and the compliance impacts of forgiving tax evaders using the 2016 Indonesian tax amnesty program where the government offers a set of discounted tax rates and penalties exemption on declaration of unreported net assets as an equivalent of unreported income. I document that the intensity in withholding tax, tax rates, level of income, as well as types of employment influence the decision to evade taxes. I further compare reported income between wage earners and self-employed individuals in each income percentile before and after the amnesty and find that the program provides no meaningful effect except limitedly for those in the very top of income distribution, e.g., around 6.1 percent increase in reported net income. The results are consistent with the argument that external factors motivate tax compliance. The third essay is titled "Compliance Effect of Tax Administration Reform on Wealthiest Individuals: Evidence from the Indonesian High-Wealth Individuals (HWI) Office." This essay investigates the effect of intensification of tax administration on HWIs compliance using the establishment of an HWI office in 2009 which administer individuals with gross assets of more than 100 billion IDR (around 10 million USD in 2009) and who reside in Indonesian capital city Jakarta. The policy creates quasi-experimental variation in the intensity of tax administration depending on the date of HWI office implementation (before and after the policy) and the types of tax office (HWI office and ordinary tax offices). I document that the HWIs reported income and income taxes at the HWI office decreased by about 40 percent over six years relative to those of HWIs administered by ordinary tax offices. The results support the literature that predicts that in the face of a certain examination the optimal strategy for high-income earners might involve some underreporting of income. The results also imply that the improvement of third-party data availability that can affect the likelihood of detection is a crucial factor in tax administration reform.

Tax compliance, or lack thereof, has been a consistent public policy issue throughout history. Based on the latest tax gap estimates for years 2008 - 2010, the IRS determined an estimated annual tax gap of about $458 billion. The majority of the tax gap (70%) relates to the individual income tax and further study is necessary in order to understand individual tax compliance behavior. Tax compliance literature historically focused on the impact of economic factors on taxpayer behavior. More recent research, however, has begun to incorporate moral, psychological and social attributes of human behavior in the quest to understand individual income tax compliance (Roth 1989, Kirchler 2007). Through a 3 (peer group) x 2 (income type) experimental tax task, this study intends to gain more understanding of the effects of peers on individual tax compliance behavior. Both tax morality and socioeconomics are explored as potential moderators of the relationship between peers and income tax compliance.

This dissertation addresses various topics in public finance that are particularly relevant for developing countries. These topics include consumption taxes, tax evasion, and rent-seeking by government officials. The first and third chapters focus on how formal and informal taxes affect production and firm behavior in developing countries, while the second focuses on household responses to a consumption tax in a developed country context. Chapter 1 examines firms’ response to a size-based exemption threshold for a Value Added Tax (VAT) in India and shows how compliance costs affect production and strategic misreporting among manufacturing firms. Although the marginal tax rate on production and compliance costs change discontinuously at the exemption threshold, firms’ response can be almost fully attributed to compliance costs alone. Patterns of input use corresponding to the reported output of firms just below the exemption threshold suggest that they are producing less output than they would have in the absence of the tax and not simply underreporting their true output to appear small. Chapter 2, joint with Yeliz Kacamak and Eleanor Wilking, studies how the tax elasticity of the consumption tax base is affected by changing sales tax remittance rules. We study empirically how an important development in U.S. sales tax policy – the requirement of online retailers to remit the sales tax instead of the consumer, as part of Voluntary Collection Agreements (VCAs) – impacts this elasticity. Our identification strategy exploits quasi-experimental variation from the staggered state-wise introduction of the VCAs. We find that consumers reduce their online expenditure after the introduction of VCAs, consistent with an increase in compliance with sales taxes on online sales and suggesting that consumers took note of the tax change. On average, we do not find evidence of an impact of the remittance rule change on the elasticity of the tax base with respect to the tax rate. Chapter 3, joint with Traviss Cassidy, studies whether competition between local governments can reduce rent-seeking by local officials in the context of a major period of decentralization in Indonesia that increased the number of local governments by 50 percent within a decade. District governments, which are responsible for most local public goods expenditure and receive revenue from business licensing and fees, split into smaller districts, increasing the number of local governments within original district boundaries. We find that on average, there is a small increase in the probability of any bribe payments by firms and no change in the average size of payments. However, newly created establishments in districts that split are less likely to report bribe payments. We suggest that these results are consistent with a model of rent-maximizing bureaucrats in which bribe rates are constrained by mobility of firms.

This thesis considers the Australian Tax Office’s use of the Risk Differentiation Framework and tax risk bow-tie approach to the compliance tax risk management of large corporations in Australia during the period 2008‒2015, from a design science research perspective. Large corporate groups, the roughly 1500 economic groups with a turnover of more than $250m AUD per annum, dominate economic activity and maintaining and improving their tax compliance is both highly important in its own right and as a key influential equity factor for other taxpayers. Most models of compliance behaviour ‒ economic, psychological and sociological ‒ treat tax compliance as a relatively binary activity of fairly homogenous taxpayers. By contrast large corporations, defined as a diverse highly skewed population of well-advised economic groups, believe they are very compliant and in practice their compliance usually turns on differing interpretations of how ambiguous law applies to a few complex transactions and structures, often across jurisdictional borders. The thesis reviews historic approaches to the modelling of tax compliance risk and then contemporary models of why people and entities comply, identifying a key gap in the academic literature relating to the management of ambiguous compliance in highly skewed populations. After examining the operating context of large corporations’ compliance from 1986 to 2007, largely an enforcement-focused viewpoint mired in auditing past arrangements, the thesis then details the development and implementation of the risk differentiation framework and tax risk bow-tie artefacts created by the author to address the knowledge gap identified. The impact of the use of these artefacts is then reviewed from a number of perspectives: Did it change the large corporate tax gap? Did it change the effectiveness of the ATO’s risk management of large corporations? The evaluation shows that a change in the compliance levels and engagement of large corporates occurred, but ascribing causality for the change is not definitively possible. The thesis concludes by reviewing the contributions made to the literature and identifying future research possibilities.

This dissertation evaluates the effectiveness of public interventions in tax policy (such as a tax compliance campaign in Greece), the performance of public institutions that dictate land zoning (corruption of zoning officials in Greece and Spain) and public health (publicly-provided health insurance; namely, Medicaid). The common underlying theme of the dissertation is the public nature of the policies examines with an empirical emphasis. The ultimate goal of this research body is to provide credible policy solutions for the improvement of public administration.

This dissertation comprises three essays that examine critical aspects of fiscal policy and explores important determinants of tax compliance in a developing country context. The first essay examines the fiscal response to changes in debt-to-GDP for a panel of developing countries. Our empirical strategy adopts a dynamic difference generalized methods of moments (DGMM) model with forward orthogonal deviation. We find a positive and significant response for the primary balance and ‘fiscal effort’ to changes in debt-to-GDP. For the fiscal components, we find a positive relationship between debt-to-GDP and general and tax revenues, and a negative relationship with primary spending. We also find evidence of nonlinearities, with countries making larger increases in the primary balance and fiscal effort at higher levels of debt, largely driven by increases in revenues. Higher income countries demonstrate a greater propensity to adjust along the revenue margins, compared to lower income countries. This might be indicative of systemic revenue mobilization challenges facing the latter. The second essay examines the effect of the provision of taxpayer services on filing and payment of the corporate income tax (CIT) and general consumption tax (GCT) for large taxpayers in Jamaica. We use a regression discontinuity design (RDD) that exploits an exogenous jump in the intensity of taxpayer service delivery, which occurs when a taxpayer reaches gross receipts of J$500 million (US$5.7 million) and is selected into the large taxpayer office (LTO). The results indicate null effects for the CIT but positive filing and payment compliance effects for the GCT. The contrasting results for the CIT and GCT may be due to the relatively weaker legal enforcement framework of the former. The results provide suggestive evidence of a complementarity between the strength of the legal enforcement framework of the taxing regime and the provision of taxpayer services. In the third essay we implement public goods messaging experiments to examine the effects on personal income tax (PIT) compliance among self-employed individuals in Jamaica. In the first sub-experiment we examine the effect of the standard public goods message on payment of quarterly PIT obligations. In the second sub-experiment we focus on payment of PIT arrears and expand the message context to include a variant of the standard public goods message – which provides additional information on actual spending on key public goods and services. The compliance outcomes in sub-experiment two relate to established PIT delinquencies, compared to sub-experiment one where there is no legal obligation to comply. We find that the standard public goods message had no effect on compliance with quarterly PIT payments in sub-experiment one. However results from sub-experiment two indicate positive compliance effects from the standard and augmented public goods messages on the probability of making a payment and the amount of PIT arrears paid after nineteen weeks. Point estimates from the standard and augmented public goods messages are not statistically different for any of the outcomes examined; suggesting that additional information on public spending allocations does not matter.

Perceptions of corruption and taxation non-compliance behaviour are key challenges to state-building in developing economies. Research into these areas, and knowledge of the relationship between them is, however, somewhat limited. This thesis addresses an identified knowledge gap about whether, and precisely how, perceptions of corruption may affect Indonesian personal income taxpayers’ compliance behaviour. It specifically examines how five different forms of perceived corruption may impact upon intentional tax underreporting behaviour by applying the theory of planned behaviour. Using a conceptual framework to derive the various research questions and testable hypotheses, this study employed a sequential mixed-methods approach. Initially, a qualitative phase involved conducting semi-structured, in-depth interviews with nine participants (three taxpayers, three tax agents, and three tax officers). The second, and core, phase of the research involved extensive data collection using a mixed-modes field survey conducted at 12 tax offices across four Indonesian regions. A total of 397 experienced taxpayers were surveyed, comprising 196 self-employed and 201 employed individuals. Three principal findings have emerged from the study. First, the data from both the qualitative and quantitative phases indicate that high levels of perceived corruption and non-compliant tax behaviour exist in Indonesia. Second, the quantitative findings clearly suggest that perceptions of corruption undermine taxpayers’ intention to report their income accurately by influencing attitudes and perceived social norms towards tax compliance. Third, the findings ultimately demonstrate that high levels of perceived general corruption (i.e. abuse of power by public officials for private gain), grand corruption (i.e. involving high-level public officials), and grand tax corruption (i.e. corruption involving high-level tax officials) influence intentional tax underreporting behaviour. The results support the notion that perceptions of corruption are an important external operating context and adversely affect tax compliance behaviour. The findings are then placed in a specific context of compliance risk management to identify strategies to improve tax compliance and explore the steps necessary to implement them effectively. It sheds some light on the applicability of the traditional responsive regulatory approach utilised by the Indonesian revenue authority, which adopts various measures to achieve either voluntary or enforced compliance, particularly in dealing with intentionally non-compliant personal taxpayers.

This dissertation investigates whether foreign aid helps or hinders the development of state capacity through its influence on tax compliance. The dissertation argues that tax compliance is the product of a bargaining process between the state and citizenry, which aid can disrupt by lowering the incentive for states to collect taxes and the incentive for people to pay them. To test this argument, a new dataset of sub-national foreign aid in Uganda is used to show that aid lowers tax compliance. These findings are supported with data gathered during fieldwork in Uganda in April and May 2015, and then the findings are generalized through a cross-national analysis of the relationship between aid and tax compliance.

My dissertation consists of three essays related to policy analysis. In the first essay we ask, how can developing nations who face revenue mobilization issues and large informal sectors use taxation as a means of nation building? To answer this, we design a dynamic general equilibrium model that accounts for a large informal sector. Contrary to previous studies that model the informal economy, we focus on the importance of the government maintaining its social fiscal contract with its constituents by including the provision of productive public goods in the model. By doing so, we show that increasing taxes can be used to encourage formal sector activity and increase revenue simultaneously. In the second essay, I develop a theoretical outline explaining why treatment effects may lag the treatment event in the context of local labor shocks, and examine the impact properly identifying of treatment date. Using the Clean Air Act Amendments (CAAA) of 1990 as a case study for a negative labor demand shock in the Appalachian coal mining industry, I find lags in treatment effects on the mining industry relative to policy implementation, as well as secondary lags in the multiplier effects on the aggregate economy relative to the labor shock. Building on this, the third essay tests the predictions of the theory in the case of a positive labor demand shock and explores the timing of multiplier effects at the sector level. Using the CAAA as the source of a positive labor demand shock in the Western United States coal industry, I again find lags in the treatment effect on the mining sector, but find variety in the timing of responses of individual sectors. I also discuss the implications these findings have for local policy makers whose communities may experience such shocks, as well as national policy makers concerned with future policy initiatives such as the Clean Power Plan.

Tax evasion is a serious issue that influences governmental revenues, IRS enforcement strategies, and tax policy decisions. While audits are the most effective method of enforcing compliance, they are expensive to conduct and the IRS is only able to audit a fraction of the returns filed each year. This suggests that audits alone are not sufficient to curb the billions of dollars of tax evaded by taxpayers each year and that a better understanding of factors influencing compliance decisions is needed to enable policymakers to craft tax policies that maximize voluntary compliance. Prior research tends to model compliance as economic, environmental, or personal decisions; however, this study models it as a multifaceted decision where these three perspective individually and interactively influence compliance. It is the first to decompose perceived detection risk into two dimensions (selection risk and enforcement risk) and investigates how these two dimensions of risk, decision domains (refund or tax due positions), and three personal factors (mental accounting, narcissism, and proactivity) influence taxpayers’ compliance decisions. I conducted a 2x2 fully crossed experiment involving 331 self-employed taxpayers. These taxpayers have opportunities to evade that employed taxpayers do not. For example, they can earn cash income that is not reported to the IRS by third parties. For self-employed taxpayers (especially those wanting to evade), perceived selection and enforcement risks may be distinctly different depending on a taxpayer’s situation, what they believe they can control, and what risk they are willing to accept. For example, selection risk may be perceived as the greatest risk for those with unreported items on their return, while enforcement risk may be more prominent for those perceiving certain levels of selection risk. Thus, I believe self-employed taxpayers are the most appropriate population to sample from and are likely have reasonable variation in the three personal factors of interest. I find that taxpayers do differentiate between selection and enforcement risks but the difference only manifests for taxpayers in certain decision domains. Taxpayers in a refund position (i.e. conservative mindset) had a greater sensitivity to the form of payment (cash vs. check) and appeared to use this information to make inferences about enforcement risk which was significantly different from their perceptions of selection risk. Conversely, tax due taxpayers (i.e. aggressive mindset) appeared to overlook the form of payment and did not assess these two risks as significantly different. Evaluating the full sample suggests that both selection risk and enforcement risk have a positive influence on compliance. Further, these risks interact to influence compliance. Specifically, compliance is greatest when taxpayers perceive a high likelihood of being selected for an audit and enforcement risk only matters when selection risk is low. This finding is interesting and suggests that avoiding interaction with the IRS is a primary objective of taxpayers. In line with my findings of taxpayers perceiving different risks in refund and tax due positions, the influence of risk perceptions on compliance differed for taxpayers in these positions. Refund taxpayers were influenced by both selection and enforcement risk, similar to the full model; however, tax due taxpayers were only influenced by selection risk and appeared to completely overlook enforcement risk when making their reporting decision. Lastly, the study shows that personal characteristics can also influence compliance in the presence of economic and environmental determinants, but some characteristics only manifest in specific decision domains. Of the three personal characteristics investigated, only mental accounting orientation was a significant predictor for the full sample. When the sample was split by decision domain, only proactivity was a predictor of compliance for refund taxpayers, while only mental accounting orientation was a predictor of compliance for due taxpayers. While I did not find results for narcissism and compliance, my subsequent analysis suggests that individual dimensions of narcissism may be better predictors of compliance than the full measure. Specifically, the exploitation dimension was a significant predictor of compliance for those in a tax due position. This study make several contributions to the accounting and tax literatures. First, this study provides support for a two-construct conceptualization for perceived detection risk that includes both selection and enforcement risks. Second, it answers calls to investigate more comprehensive compliance models and finds economic, environmental, and personal characteristics individually and interactively influence compliance. Third, this study investigates three personal factors that have not been investigated in the tax compliance literature. Finally, this study answers calls for research on self-employed taxpayers and suggests that the IRS will be more successful in increasing compliance by playing on taxpayers’ aversion to being selected for an examination than communicating information on the IRS’ ability to detect noncompliance during an examination.

The purpose of this dissertation is to identify the impact of moral emotions (sympathy and empathy) and religious education on individual behavior. This dissertation is divided into three main chapters. The first chapter examines the effect of sympathy and empathy on tax compliance. We run a series of experiments in which we employ methods such as priming, the Davis Empathic Concern scale, and questions about frequency of prosocial behaviors in the past year in order to promote and to identify empathy and sympathy in subjects. We observe the subjects’ decisions in a series of one-shot tax compliance game presented at once and with no immediate feedback. Our results suggest that the presence and/or the promotion of sympathy in most cases encourage tax compliance. The second chapter takes into consideration religious schooling as a way of helping the development of religiosity or morality on individuals. Our intent is to investigate the effect of religious education on charitable donations in adulthood. Our empirical analysis is based on data from the Panel Study of Income Dynamics dataset. Our estimation results indicate that there is a positive effect of religious education on donations to secular and religious organizations. The third chapter explores the hypothesis that sympathetic individuals are more likely to support income redistribution because they believe that the poor may benefit from this policy. We use data from the General Social Survey to estimate support for income distribution. Our results suggest that some measures of sympathy have a positive effect on support for redistribution. Across all three main chapters, we find that sympathy has mostly small and positive effects on the types of behavior examined in this dissertation, although we are not able to determine the impact of religious education on charitable donations. Despite the sometimes weak results of this research caused by the limitations of the available data and the complexity of the issues studied, we believe that the development of these moral emotions is likely to generate benefits to society.

Prior tax compliance literature has examined the use of persuasive messages that emphasize audit and sanctions as a way to increase compliance. This work has been done in single period experiments using either survey or field study methodologies. Results from the prior studies are mixed. The theory of reasoned action is a theory of social behavior that promotes emphasizing direct consequences of actions to motivate specific behavior. Persuasive messages based on this theory have been found to be effective in a number of different disciplines. The theory of reasoned action has been used in the field of tax compliance to explain compliance behavior and examine the behavioral beliefs related to compliant reporting, but has not been used to design persuasive messages aimed at increasing compliance. In this dissertation, I conduct a laboratory experiment that examines the effects of two types of messages - a traditional message consisting of a simple reminder of audit risk and a message designed based on the theory of reasoned action. Consistent with prior research on tax compliance, I test the messages in an initial single period but I extend prior research by also examining the effects of the messages over repeated periods. Neither the traditional message nor the message based on the theory of reasoned action have a significant effect on initial period compliance. The interaction effect of the traditional message and time on tax compliance is positive and significant and the interaction effect of the theory of reasoned action message and time on tax compliance is positive and marginally significant. These results provide evidence that the messages may be effective in increasing an individual's tax compliance over time. In the repeated period data, the theory of reasoned action message exhibits a positive and significant impact on the amount of income reported when an individual reports less than 100% of their earned income, providing evidence that messages designed based on the theory of reasoned action may be an effective tool in reducing the tax gap.

Transfer pricing has become a major concern for tax authorities and multinational enterprises (MNEs) worldwide. Transfer pricing is one of several tax minimization mechanisms used by MNEs and an especially difficult one to audit. Previous studies on tax compliance have mainly focused on individual compliance with little focus on corporations. Furthermore, studies on transfer pricing compliance specifically have focused primarily on developed regions, such as the United States of America, Japan, Europe, and Australia. Developing countries (DCs) are handicapped because, on the one hand, they need MNEs for technology transfer, while on the other hand they lack resources and capabilities for transfer pricing audits. Enforcement is weakened by other factors including inadequate transfer pricing provisions, outmoded and misguided audit strategies and corrupt behaviour. This research examines factors influencing MNEs’ decisions to comply with transfer pricing provisions in the developing country of Indonesia. Indonesian tax auditors were surveyed and interviewed and representatives of MNEs in Indonesia were interviewed. The research finds that, due to the general Indonesian tax audit policy (particularly relating to the auditing of value added tax (VAT) refund claims), tax office rotation policy, career structures, the lack of training and lack of comparable data on transfer pricing, and tax auditors’ preference to not undertake transfer pricing audits. This led to a relatively low number of transfer pricing audits, with a correspondingly low probability of an MNE being subject to a transfer pricing audit. The research also found that local subsidiaries of foreign MNEs arranged their affairs, so as not to have refund claims and, thus, avoid most routine audits by the Indonesian Directorate General of Taxation (DGT). This behaviour was consistent with an inference that these MNEs realised that the probability of non routine audits on transfer pricing was low. Both local subsidiaries and foreign MNEs and Indonesian headquartered MNEs indicated that tax audits were poorly organised, involved unpredictable delays and were often associated with corrupt behaviour. Both groups of MNE were sceptical of the ability of Indonesian tax auditors to conduct transfer pricing audits competently and with integrity. The study concludes that in addition to developing adequate transfer pricing provisions, the overall tax regime plays an important role in improving transfer pricing compliance. In particular, audit policy and strategy, and key human capital policies affecting staffing and career structures, are key elements of the overall tax regime that affect transfer pricing compliance To adequately ensure such compliance, governments will need to train and retain transfer pricing specialists, modernise their audit policy and strategies, and review standard administrative procedures, such as regular rotation and promotion of staff, as well as providing additional support for complex and prolonged transfer pricing audits.

This dissertation consists of three separate but interrelated studies examining the antecedents and consequences of sales and use tax (SUT) policy. The first study investigates whether elements of the SUT system influence elements of economic development, and tests whether SUT rates and/or bases influence state-aggregated levels of capital expenditures and employment within the manufacturing sector from 1983-2006. Results indicate that elements of the tax base (i.e., SUT exemptions) affect these indicators of economic development, but the same relationship was not seen for SUT rates. The second study examines individual taxpayer compliance across different tax settings (i.e., the state use tax compared to the federal income tax) and tests whether differences in detection mechanisms, social norms, or ignorance explain these differences in compliance. Based on a final sample of 148 taxpayers, results show that social norms had an important influence on tax compliance differences across tax settings. The third study investigates the antecedents of states' adoption of the Streamlined Sales & Use Tax Agreement (SSUTA) using both a cross-sectional empirical model and an in-depth qualitative case study of three states. Both the model and case study suggest that governmental interest groups, rather than businesses, play an important role in the adoption of inter-jurisdictional tax policy changes. Overall, the three studies within this dissertation all advance the SUT literature by using various theoretical perspectives and methodological approaches to demonstrate that governmental interest groups influence the adoption of SUT policy (antecedents), and that SUT provisions in turn influence business and individual decisions alike (consequences).

The first essay analyzes the effect of taxpayers' ethnic identity and the country's ethnic heterogeneity on voluntary tax compliance. I use data from the European and World Values Surveys Wave 4. Individual voluntary tax compliance is measured based on self-reported attitude towards tax cheating. Survey respondents are categorized into ethnic majority and minority groups of their country based on their racial, linguistic and religious background. Using a pooled cross-country micro-level specification, I find that individuals from the minority groups are more likely to report that tax cheating is justifiable than those from the majority groups. In addition, ethnic heterogeneity of the country's population dampens the tax morale of the majority groups. I also find that on average, the voluntary compliance level is lower in heterogeneous countries than homogeneous countries. The second essay presents a laboratory experiment to study the tradeoff between self-interest and group loyalty. Specifically, we measure the effects of induced group identity on participant social preferences. We find that when participants are matched with an ingroup member (as opposed to an outgroup member) they show more charity concerns if they have a higher payoff and less envy if they have a lower payoff. While participants are more likely to reward an ingroup match for good behavior they are less likely to punish an ingroup match for misbehavior. They are significantly more social-welfare concerned when matched with an ingroup member. The findings indicate that participants are more altruistic towards an ingroup match. Moreover, ingroup matching generates significantly higher expected earnings. The third essay analyzes the response of state spending to windfalls using tobacco settlements in the U.S. in the late 1990s as a natural experiment. We find that state direct spending increases by about $1 in response to one dollar increase in the settlement funds and by about 8 cents to the voter private income, which is strong evidence in support of the flypaper effect in the public finance literature. We also find states that have securitized partially or entirely their settlement revenue have larger spending responses.