American Economic Journal:
Economic Policy
ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)
Does Tax-Collection Invariance Hold? Evasion and the Pass-Through of State Diesel Taxes
American Economic Journal: Economic Policy
vol. 8,
no. 2, May 2016
(pp. 251–86)
Abstract
In simple models, the incidence of a tax is independent of the identity of the remitting party. We illustrate that this prediction fails to hold if opportunities for evasion differ across economic agents. Second, we estimate how the incidence of state diesel taxes varies with the point of collection, where the remitting party varies across states and over time. Moving tax collection upstream from retailers substantially raises the pass-through of diesel taxes to consumers. Furthermore, tax revenues increase when collecting taxes from wholesalers rather than from retailers, suggesting that evasion is the likely explanation for the incidence result. (JEL H22, H25, H26, H71, L71)Citation
Kopczuk, Wojciech, Justin Marion, Erich Muehlegger, and Joel Slemrod. 2016. "Does Tax-Collection Invariance Hold? Evasion and the Pass-Through of State Diesel Taxes." American Economic Journal: Economic Policy 8 (2): 251–86. DOI: 10.1257/pol.20140271Additional Materials
JEL Classification
- H22 Taxation and Subsidies: Incidence
- H25 Business Taxes and Subsidies including sales and value-added (VAT)
- H26 Tax Evasion and Avoidance
- H71 State and Local Taxation, Subsidies, and Revenue
- L71 Mining, Extraction, and Refining: Hydrocarbon Fuels