Joel Slemrod, Are Estimated Tax Elasticities Really Just Tax Evasion Elasticities? The Case of Charitable Contributions, The Review of Economics and Statistics, Vol. 71, No. 3 (Aug., 1989), pp. 517-522

This paper develops a methodology that uses microeconomic data from individual tax returns to test for the presence of tax evasion. The test is then applied to a large sample of taxpayers drawn from the U.S. Treasury tax file for 1977. The frequency of evasion indicated by the test is significantly greater than zero and within the wide range that other evidence suggests is the extent of evasion. The associations between evasion and characteristics of the taxpayer such as marginal tax rate, income, age, and marital status are also investigated and compared to the findings of earlier studies.

The income of Puerto Rican affiliates of U.S. corporations is essentially untaxed by either Puerto Rico or the United States. This lowers the tax penalty on investment there, and also makes it attractive to shift reported taxable income from the U.S. parent corporation to the Puerto Rican affiliate. This paper investigates these two interrelated impacts of taxation by developing a structural econometric model of the joint decisions regarding investment and income shifting, and estimating the model using firm-level data on the activity U.S. corporations in Puerto Rico. The results suggest that the income shifting advantages are the predominant reason for U.S. investment in Puerto Rico.

This paper examines data from U.S. federal tax returns to shed light on whether the timing of death is responsive to its tax consequences. We investigate the temporal pattern of deaths around the time of changes in the estate-tax system periods when living longer, or dying sooner, could significantly affect estate-tax liability. We find some evidence that there is a small death elasticity, although we cannot rule out that what we have uncovered is ex post doctoring of the reported date of death.

We examine two Pakistani programs to see if the public disclosure of tax information and social recognition of top taxpayers promotes tax compliance. Pakistan began revealing income tax paid by all taxpayers in 2012. Simultaneously, another program began recognizing and rewarding the top 100 tax- paying corporations, partnerships, self-employed individuals, and wage earners. We find that the public disclosure caused an increase of 9 log points and the social recognition program 17 log points in the tax payments of agents exposed to the program. Our results suggest that such programs can be important policy levers to mobilize additional resources.