Frontiers of Tax Research
Friday, Jan. 5, 2024 10:15 AM - 12:15 PM (CST)
- Chair: Damon Jones, University of Chicago
Fiscal Consequences of Corporate Tax Avoidance
AbstractMultinational corporations shift a large share of their foreign profits to tax havens and, due to this corporate tax avoidance, governments lose a portion of their tax revenue. We study the consequences of multinational tax avoidance on the structure of government tax revenue. Using German municipal data we analyse how changes in municipal trade tax rates levied on corporate profits affect local tax revenue structure. Following a trade tax rate increase, we find that municipalities with high exposure to aggressive multinationals experience a significant decline in trade tax revenue levels and shares. They do not compensate for this decline with higher property tax rates or revenues and consequently see a decline in overall tax revenues.
The Effects of Child Care Subsidies on Paid Child Care Participation and Labor Market Outcomes: Evidence from the Child and Dependent Care Credit
AbstractThe Child and Dependent Care Credit (CDCC), a tax credit based on income and child care expenses, reduces child care costs for working families. The Economic Growth and Tax Relief Reconciliation Act expanded the CDCC in 2003, generating differential increases in generosity across states and family sizes. I document CDCC eligibility and expenditures across income and demographic groups over time. I show that a 10 percent increase in benefits increases paid child care participation by five percent and increases labor supply among married mothers. Labor supply responses among married mothers with very young children suggest benefits may increase long-run earnings.
Form-1099K for Gig Workers: Quantifying the 1099-K Gap and Impacts on Tax Compliance
AbstractA key challenge for measuring platform gig work in tax data after 2016 is the so called “1099-K gap,” where many platform gig workers earning less than $20,000 no longer received an information return. We combine federal tax return data with returns from states that introduced lower reporting thresholds to study the effects of this change. Incorporating state information returns in this setting allow us to make two key contributions in this paper: we quantify the size of the 1099-K gap and analyze how receipt of a 1099-K affects tax compliance. First, we present a new framework using returns from states that have lower reporting thresholds to provide a more complete estimate of total platform work. Our imputation methodology suggests raw counts underestimate platform work by approximately 770,000 workers by 2018. Second, we evaluate to what extent receipt of a 1099-K form affects tax compliance. We find that platform gig workers who received an information return reported on average $420 more in self-employment profits. Together these suggest an estimated $323.4 million in unreported profits due to the 1099-K gap.
- H2 - Taxation, Subsidies, and Revenue
- H0 - General