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The inextricable association of measurement errors and tax evasion as examined through a microanalysis of survey data matched with fiscal data: a case study

Author

Listed:
  • Michele Lalla

    (University of Modena and Reggio Emilia
    CAPP (Centre for the Analyses of Public Policies))

  • Patrizio Frederic

    (University of Modena and Reggio Emilia
    RECent (Center for Economic Research))

  • Daniela Mantovani

    (University of Modena and Reggio Emilia
    CAPP (Centre for the Analyses of Public Policies))

Abstract

Individual records referring to personal interviews conducted for a survey on income in Modena during 2012 and tax year 2011 were matched with the corresponding records in the Italian Ministry of Finance databases containing fiscal income data for tax year 2011. The analysis of the resulting data set suggested that the fiscal income data were generally more reliable than the surveyed income data. Moreover, the obtained data set enabled identification of the factors determining over- and under-reporting, as well as measurement errors, through a comparison of the surveyed income data with the fiscal income data, only for suitable categories of interviewees, that is, taxpayers who are forced to respect the tax laws (the public sector) and taxpayers who have many evasion options (the private sector). The percentage of under-reporters (67.3%) was higher than the percentage of over-reporters (32.7%). Level of income, age, and education were the main regressors affecting measurement errors and the behaviours of tax evaders. Tax evasion and the impacts of personal factors affecting evasion were evaluated using various approaches. The average tax evasion amounted to 26.0% of the fiscal income. About 10% of the sample was made up of possible total tax evaders.

Suggested Citation

  • Michele Lalla & Patrizio Frederic & Daniela Mantovani, 2022. "The inextricable association of measurement errors and tax evasion as examined through a microanalysis of survey data matched with fiscal data: a case study," Statistical Methods & Applications, Springer;Società Italiana di Statistica, vol. 31(5), pages 1375-1401, December.
    • Handle: RePEc:spr:stmapp:v:31:y:2022:i:5:d:10.1007_s10260-022-00633-6
    DOI: 10.1007/s10260-022-00633-6
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    More about this item

    Keywords

    Fiscal income; Surveyed income; Response bias; Under-reporting; Over-reporting; Administrative data;
    All these keywords.

    JEL classification:

    • C46 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Specific Distributions
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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