UC Santa Barbara
Reducing evasion through self-reporting: Evidence from charitable contributions
- Author(s): Tazhitdinova, Alisa
- et al.
Published Web Locationhttps://doi.org/10.1016/j.jpubeco.2018.06.001
In absence of third-party reporting, taxpayers are required to self-report information with various degrees of detail, ranging from uncorroborated claims to comprehensive records with receipts. Using a quasi-experimental design applied to noncash charitable contribution deductions, I show that even basic self-reporting requirements are effective at reducing evasion but impose large compliance costs on taxpayers. I find that simplified reporting requirements reduce reporting costs by $55 per person and substantially increase claimed donations. However, half of the new donations are due to evasion. Thus, information reporting should only be imposed on total reported donations above a pre-specified threshold.