Open Access Open Access  Restricted Access Subscription or Fee Access

Is it possible to detect Tax Evasion using administrative data? A proposal based on a Binary Choice Model Affected by a Severe Censoring Mechanism

Maria Felice Arezzo, Giuseppina Guagnano

Abstract



Tax evasion is a matter of huge concern for all countries as it undermines the public finance and can lead to a very inefficient resource allocation. Therefore it is of great interest to develop models that can help targeting the units (firms or individuals) at risk of noncompliance. Our focus is on a particular facet of tax evasion: undeclared work. We use an ad hoc data set by linking information on the inspections carried out in Italy in 2005
by the National Institute of Social Security on building and construction companies and a vast set of firms characteristics. In the analysis there are two methodological issues: the non-randomness of the inspections and the very low fraction of inspected firms in the population (around 5%). We propose a method that combine the Heckman-type model with sample selection and the response-based sampling. We find that the likelihood function is a
weighted version of the Heckman model, where the weights take into account the sampling scheme.

Keywords


Tax evasion, Undeclared work, Selection bias, Response-based sampling, Binary choice models, Observational study.

Full Text:

PDF

Refbacks

  • There are currently no refbacks.


Disclaimer/Regarding indexing issue:

We have provided the online access of all issues and papers to the indexing agencies (as given on journal web site). It’s depend on indexing agencies when, how and what manner they can index or not. Hence, we like to inform that on the basis of earlier indexing, we can’t predict the today or future indexing policy of third party (i.e. indexing agencies) as they have right to discontinue any journal at any time without prior information to the journal. So, please neither sends any question nor expects any answer from us on the behalf of third party i.e. indexing agencies.Hence, we will not issue any certificate or letter for indexing issue. Our role is just to provide the online access to them. So we do properly this and one can visit indexing agencies website to get the authentic information.