Does tax audit selection methodology have an impact on corporate tax evasion and noncompliance?
Tax evasion and non-compliance plague developing and developed economies alike but are especially aggravated in developing countries due to limited enforcement capacity leading to an estimated $100-$250 billion lost to tax evasion annually (UN, 2015). Developing countries often use tax audits to combat tax evasion and to deter tax non-compliance.
Tax audits ideally have a three-pronged impact: they detect tax evasion, they enable tax authorities to determine evasion techniques being employed by the taxpayers, and lastly, by increasing the future risk of detection, impact taxpayer behavior towards fewer instances of evasion and non-compliance (S Khwaja, Munawer, Awasthi, Rajul, Loeprick, 2011). Some developing countries use random audit selection, whereas others use a set of parameters, including previous non-compliance to select firms for audit. However, it remains an open question in the current literature as to which method of audit selection most enhances the ability of tax audits to deter evasion and decrease future tax non-compliance.
In this study, I leverage natural experiments in Pakistan that varied audit selection policies to identify and estimate the effects of random, parametric, and risk-based audit selection on firm tax evasion and tax non-compliance. Pakistan provides an ideal setting from which to approach this problem since the country’s tax authority, the Federal Board of Revenue (FBR), was limited to conducting entirely random audits for TY2013 and 2014 (TY- tax year), parametric audits for TYs 2015, 2016, and 2017, and risk-based audits focused on non-compliant taxpayers for TY 2018. I use de-identified tax administrative data from the FBR which constitutes the complete universe of tax returns filed by formal firms registered for income taxes in Pakistan from TY2008-TY2021. I measure tax evasion using changes in voluntarily reported indicators including turnover, total admitted tax liability and gross profit/loss; and measure tax compliance, post-audit, in terms of whether the tax return was filed voluntarily and whether it was filed on time.
Using the 1918 influenza pandemic, I provide empirical evidence to emphasize that policies directed at vulnerable segments can reduce baseline health inequities that can lead to long term decrease in inequality
Fetal origins hypothesis by David Barker stated that in utero exposure to negative health shocks increased chances of cardiovascular disease in adulthood. Using the influenza pandemic of 1918, influential literature shows that all those in utero during the pandemic have considerably reduced adult socioeconomic outcomes but when differences in parental socioeconomic status (SES) are accounted for, the negative effects disappear entirely.
My paper addresses the question of whether negative health shocks while in utero are heterogenous in their impacts on adult health and socioeconomic outcomes, and whether they are mediated by parental SES at birth. Prior empirical evidence using the 1918 pandemic suggests uniform negative impacts across treated households, reducing adult outcomes for all those who were in utero during the pandemic. On the contrary, while my analysis builds on previous research, I find a heterogenous impact of negative health shocks on adult life outcomes, linking this paper to a growing literature that relates access to resources in utero to health inequities and economic outcomes in adulthood.
My paper contributes to the debate by showing that in utero exposure to the 1918 flu pandemic decreased adult life educational and employment outcomes but not uniformly for all households. The findings indicate that males, non-white males, and females that belonged to low SES families while in utero during the pandemic faced reduced educational outcomes, significantly decreased income, greater chances of falling below the poverty line, and substantial decline in socioeconomic status whereas those belonging to high SES families at birth were not impacted at all.
As we are currently surviving through a global pandemic which is nothing short of a public health crisis affecting low-income families more than it is impacting high income families, my results show that policy interventions targeting the health of mothers within the low SES segment of the society can yield positive outcomes especially in terms of reduced income inequalities post pandemic. My analysis indicates that if programs such as enhanced unemployment benefits and rental assistance programs prioritize low SES expecting mothers, they have the capacity to enhance later life outcomes for those in utero by a great magnitude.
Why does the Marginal Value of Public Funds (MVPF) of Conditional Cash Transfer (CCT) programs targeting education vary in a subset of developing countries from Latin America, Sub-Saharan Africa, and South Asia.
I apply the Marginal Value of Public Funds (MVPF) framework (Hendren & Sprung-Keyser, 2020) to Conditional Cash Transfer (CCT) programs targeting education in a subset of developing countries from Latin America, Sub-Saharan Africa, and South Asia.
CCTs are an integral arm of government spending programs aiming to reduce inequality through increased access to education, and while they form a small percentage of the overall education budget within the countries in my sample, the efficiency of these programs can be impacted by several things.
As the first step of my analysis, I use the MVPF framework as a comparable metric to determine the long-run impacts of government investments in education via CCTs and calculate the overall welfare effect of these programs. Once I determine the MVPF of the programs included in my database, I will conduct a cross-country comparison of the efficiency of these programs across several dimensions such as: redistributive impact of fiscal interventions; budgeted education spending; compulsory schooling laws; child labor laws; and consumption taxes. This research will contribute to the overall debate on the efficiency and efficacy of CCT programs targeting education and can inform future fiscal policy initiatives focused on public expenditures in education.
Let Me Notch There: Dynamic Implications of Size-Based Tax Policies (joint with Mazhar Waseem and Usama Jamal)
Tax Evasion and Progressivity of the Tax System: Evidence from Pakistan (joint with Mazhar Waseem and Obeid ur Rehman)
What is the impact of adolescent depression on adult educational attainments and other labor market outcomes (joint with Farah Khan and Truc Bui)
In this paper we investigate the impact of adolescent depression on adult life education attainment and employment outcomes using data from the National Longitudinal Survey of Youth 97 (NLSY97). We look at a subset of the data on siblings only and utilize the answers to questions on depressive symptoms that were collected during interview survey waves 2000, 2002, 2004, 2006, 2008, 2010, and 2015. Despite some obvious limitations, our paper offers several new contributions.
First, we provide evidence on the impact of depression on educational attainment and labor market outcomes whereas previous studies have looked at ADHD specifically or/and mental health broadly. Secondly, because several things can impact mental health, we base our investigation on children who started having depressive symptoms before the age of 18 and use sibling fixed effects to capture any household/family differences. Lastly, we look at a whole host of outcomes including test scores, highest degree attained, and income.
Our results show that if the frequency with which an individual feel depressed decreases, it leads to a fall in total GPA by 0.305/4.0 point. The coefficient of the interaction of depression and number of siblings is significant at 5% and positive, suggesting that the impacts of depression on total GPA are positive with a larger number of siblings. The impact of depression and its interaction with number of siblings on math GPA is like that of total GPA but the impacts are larger in magnitude. For annual individual income and highest education level in 2015 as outcomes, mental problems and depression have negative and insignificant impacts while their interactions with number of siblings affect income positively and insignificantly.
In the long run, how do minimum taxes imposed on total revenue and book income impact taxpayers’ production and investment decisions, tax revenue collected, and overall tax evasion?
The FBR, in addition to the standard corporate tax rate on profits, levied a minimum tax on total revenue in TY2009 and introduced an Alternate Corporate Tax (ACT) on book income in TY2014, creating unique cut-offs in the tax schedule incentivizing firms to evade taxes through misreporting because firms had to pay the higher of these three taxes.
Using a rich data set of corporate tax returns for the entire universe of corporate tax filers in Pakistan, from TY 2008-2020, I will extend Best et al.'s (2015) static bunching approach to a dynamic bunching process (Marx, 2018) to determine what behavioral patterns emerged from a persistent notch and how they impacted reported revenue and book income.
Do measures seeking to reduce the prevalence of sexual harassment at the workplace negatively impact employment outcomes for women?
I will attempt to answer whether measures seeking to demotivate sexual harassment behavior at the workplace backfire yielding negative impacts on women’s employment outcomes including employment rates and the gender pay gap.
It makes intuitive sense to assume that anti-sexual harassment trainings at the workplace will cause such incidents to reduce by raising more awareness of what constitutes proper workplace behavior.
Ideally, the trainings should have a positive impact encouraging more women to join the workforce. Additionally, it is also important to note that these training mandates come at a cost to the employer, and it wouldn’t be too farfetched to assume that this increase in cost might impact women’s earnings potential at the workplace.Throughthispaper,Iaimtofillinsomeofthesegapsidentified within the literature on the economic impact of sexual harassment against women at the workplace.