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Who does and doesn't pay taxes?
Author(s) -
Advani Arun
Publication year - 2022
Publication title -
fiscal studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.63
H-Index - 40
eISSN - 1475-5890
pISSN - 0143-5671
DOI - 10.1111/1475-5890.12257
Subject(s) - taxpayer , audit , compliance (psychology) , cash , accounting , public economics , business , economics , actuarial science , inequality , demographic economics , finance , psychology , social psychology , macroeconomics , mathematical analysis , mathematics
We use administrative tax data from audits of self‐assessment tax returns to understand what types individuals are most likely to be non‐compliant. Non‐compliance is common, with one‐third of taxpayers underpaying by some amount, although half of aggregate under‐reporting is done by just 2 per cent of taxpayers. Third‐party reporting reduces non‐compliance, while working in a cash‐prevalent industry increases it. However, compliance also varies significantly with individual characteristics: non‐compliance is higher for men and younger people. These results matter for measuring inequality, for understanding taxpayer behaviour, and for targeting audit resources.