2023 Theses Doctoral
Making the Fiscal Contract Work: The Politics of Tax Evasion, Tax Enforcement, and Redistributive Fiscal Governance
Is tax evasion political? How do fiscal politics change when a substantial share of taxpayers decide to shirk on their fiscal burden? In the economics literature, a well-established tradition of work has investigated the behavioral and institutional determinants of taxpaying, informing polices on how to improve compliance. However, existing work has remained conspicuously silent on the political fallout from tax noncompliance. The projects in this dissertation begin filling this gap. In the first paper, I turn to local tax politics and ask when local officials are better able to handle subnational taxation in a high-evasion environment. Exploring the Italian case, I show that mayors born in the town are better suited for tax governance, increasing enforcement, tax rates, and revenue.
In my second project, I move to national tax politics and investigate the impact of information about tax cheating by the rich on public preferences for taxing the rich. Leveraging an original survey experiment conducted in Italy, I document a negative impact of perceived cheating by the rich on demand for tax progressivity.
Finally, in the third study, I flip the question and ask whether tax enforcement can impact revealed public preference for redistribution. With three empirical case studies in Italy, Slovakia, and Australia, I argue and provide evidence for a twin dynamic. When enforcement is successful and popular, individuals display greater propensity for redistribution. This is the case in Italy, where an electorally-popular crackdown on property-tax evasion causes increases in donations to local public-benefit non-profit initiatives.
By contrast, when enforcement is not perceived as successful or causes backlash by taxpayers, I document opposite reaction. In Slovakia, where enforcement is not perceived as credible, publicized audits against local businesses lead to decreases in local charitable donations. Similarly, in Australia, crackdowns against tax-avoidance schemes in the summer of 1998 caused widespread protests and led to electoral shifts in favor of a regressive tax reform in the October 1998 election. Taken together, the findings of this dissertation conclusively demonstrate that tax evasion is indeed political. Enforcement and noncompliance at both national and subnational level have deep political roots and implications for the broader politics of the fiscal contract, potentially upholding or stymieing the prospects of redistribution.
This item is currently under embargo. It will be available starting 2028-04-04.
More About This Work
- Academic Units
- Political Science
- Thesis Advisors
- Huber, John D.
- Ph.D., Columbia University
- Published Here
- April 12, 2023