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Size-dependent tax enforcement and compliance : global evidence and aggregate implications

Author

Listed:
  • Bachas,Pierre Jean
  • Fattal Jaef,Roberto N.
  • Jensen,Anders
Abstract
This paper studies the prevalence and consequences of size-dependent tax enforcement and compliance. The identification strategy uses the ranking of industries'average firm size in the United States as an instrument for the size ranking of the same industries in developing countries. Data on 125,000 firms in 140 countries show that tax enforcement and compliance increase with size. Size-dependence is more prevalent in low-income countries, and concentrated at the top of the size distribution. When quantified in a general equilibrium model, removing size dependent enforcement leads to gains in Total Factor Productivity of up to 0.8 percent.

Suggested Citation

  • Bachas,Pierre Jean & Fattal Jaef,Roberto N. & Jensen,Anders, 2018. "Size-dependent tax enforcement and compliance : global evidence and aggregate implications," Policy Research Working Paper Series 8363, The World Bank.
    • Handle: RePEc:wbk:wbrwps:8363
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    More about this item

    Keywords

    Public Finance Decentralization and Poverty Reduction; Public Sector Economics; Public Sector Development; Tax Law; Law and Development; Tax Administration; Economic Adjustment and Lending; Macroeconomics and Economic Growth; Macro-Fiscal Policy; Taxation&Subsidies; Labor Markets; Common Carriers Industry; Pulp&Paper Industry; Business Cycles and Stabilization Policies; Food&Beverage Industry; Industry; Textiles; Apparel&Leather Industry; Construction Industry; General Manufacturing; Plastics&Rubber Industry; Private Sector Development; Business in Development;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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