William C. Boning, John Guyton, Ronald H. Hodge, II, Joel Slemrod, and Ugo Troiano Release Paper, Heard it Through the Grapevine: Direct and Network Effects of a Tax Enforcement Field Experiment
Heard it Through the Grapevine: Direct and Network Effects of a Tax Enforcement Field Experiment was released by doctoral student William C. Boning, Alum John Guyton, Ronald H. Hodge, II, Professor Joel Slemrod, and Professor Ugo Troiano. This study bridges the gap between the responses of targeted taxpayers and the response of the population at large by examining both the direct effect of enforcement on targeted taxpayers and the network effects of enforcement.
Tax enforcement may affect both the behavior of those directly treated and of some taxpayers not directly treated but linked via a network to those who are treated. A large-scale randomized field experiment enables us to examine both the direct and network effects of letters and in-person visits on withheld income and payroll tax remittances by at-risk firms. Visited firms remit substantially more tax. Their tax preparers’ other clients also remit slightly more tax, while their subsidiaries remit slightly less. Letters have a much smaller direct effect and no network effects, yet may improve compliance at lower cost.