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ALISA TAZHITDINOVAI am an Assistant Professor of Economics at UC Santa Barbara.
My research interests are in public economics, labor economics, and psychology and economics. Contact Information:
Department of Economics, UCSB 2127 North Hall, Santa Barbara, CA 93106-9210 Email: tazhitda [at] ucsb.edu |
How to pronounce my last name? "tah-ZHEET-dee-noh-vah," where "zh" is pronounced as "s" in "leisure"
PUBLICATIONS:
"Reducing Evasion Through Self-Reporting: Evidence from Charitable Contributions"
Journal of Public Economics 2018, volume 165 (September), pp. 31-47. Short Slides
In absence of third-party reporting, taxpayers are required to self-report information with various degrees of detail, ranging from uncorroborated claims to comprehensive records with receipts. Using a quasi-experimental design applied to noncash charitable contribution deductions, I show that even basic self-reporting requirements are effective at reducing evasion but impose large compliance costs on taxpayers. I find that simplified reporting requirements reduce reporting costs by $55 per person and substantially increase claimed donations. However, half of the new donations are due to evasion. Thus, information reporting should only be imposed on total reported donations above a pre-specified threshold.
In absence of third-party reporting, taxpayers are required to self-report information with various degrees of detail, ranging from uncorroborated claims to comprehensive records with receipts. Using a quasi-experimental design applied to noncash charitable contribution deductions, I show that even basic self-reporting requirements are effective at reducing evasion but impose large compliance costs on taxpayers. I find that simplified reporting requirements reduce reporting costs by $55 per person and substantially increase claimed donations. However, half of the new donations are due to evasion. Thus, information reporting should only be imposed on total reported donations above a pre-specified threshold.
WORKING PAPERS:
Do Only Tax Incentives Matter? Labor Supply and Demand Responses to an Unusually Large and Salient Tax Break
Revise and Resubmit, Journal of Public Economics; Winner of the 2016 IIPF Peggy and Richard Musgrave Prize
I explore labor supply responses to an unusually large and salient notch generated by the “Mini-Job” program in Germany. Using administrative data, I document four findings. First, despite the unusually large magnitude of incentives, earnings elasticities are modest, even after accounting for frictions. Second, the observed response cannot be fully attributed to labor supply alone; instead, the observed outcomes are highly dependent on the availability of jobs and, hence, are strongly influenced by labor demand incentives. Third, I show that these firm incentives are driven by the fact that mini-jobs workers receive lower fringe-benefit payments. Fourth, to explain the empirical results, I develop a theoretical model that shows that firms are more likely to supply tax-advantaged jobs and thus facilitate labor supply responses, when the statutory incidence of incentives falls on firms.
I explore labor supply responses to an unusually large and salient notch generated by the “Mini-Job” program in Germany. Using administrative data, I document four findings. First, despite the unusually large magnitude of incentives, earnings elasticities are modest, even after accounting for frictions. Second, the observed response cannot be fully attributed to labor supply alone; instead, the observed outcomes are highly dependent on the availability of jobs and, hence, are strongly influenced by labor demand incentives. Third, I show that these firm incentives are driven by the fact that mini-jobs workers receive lower fringe-benefit payments. Fourth, to explain the empirical results, I develop a theoretical model that shows that firms are more likely to supply tax-advantaged jobs and thus facilitate labor supply responses, when the statutory incidence of incentives falls on firms.
"Are Changes of Legal Form Costly? Income Shifting and Business Entry Responses to Taxes"
Revise and Resubmit, Journal of Public Economics
Drawing on administrative panel data covering the full population of business owners in the UK, I study the effects of lower tax liability on business entry and income shifting. I find that a 10% increase in savings from incorporation leads to a 1.7% increase in the number of new business owners, and a 2.3% increase in income shifting. Nonetheless, despite large tax savings to incorporation (exceeding 10 pp in some years), a substan- tial proportion of business owners fails to incorporate. Using a revealed- preference approach, I estimate an average yearly cost of incorporation of more than £3,750 per business owner. These findings imply that income shifting through incorporation is not the primary avoidance channel for the self-employed and that the large perceived cost of incorporation may act as a barrier to entrepreneurship.
Drawing on administrative panel data covering the full population of business owners in the UK, I study the effects of lower tax liability on business entry and income shifting. I find that a 10% increase in savings from incorporation leads to a 1.7% increase in the number of new business owners, and a 2.3% increase in income shifting. Nonetheless, despite large tax savings to incorporation (exceeding 10 pp in some years), a substan- tial proportion of business owners fails to incorporate. Using a revealed- preference approach, I estimate an average yearly cost of incorporation of more than £3,750 per business owner. These findings imply that income shifting through incorporation is not the primary avoidance channel for the self-employed and that the large perceived cost of incorporation may act as a barrier to entrepreneurship.
[Updated] "Increasing Hours Worked: Moonlighting Responses to a Large Tax Reform"
Holding multiple jobs – or moonlighting – is increasingly popular in OECD countries, with 5 to 10% of workers holding two or more jobs. Yet little is known about the determinants of moonlighting and its responsive- ness to financial incentives: research has been held back by the lack of identifying variation, as most policies treat primary and secondary employments equally. This paper circumvents these limitations by studying a unique reform in Germany that allowed workers to hold small secondary jobs tax-free, thus decreasing the tax rate on secondary earnings by be- tween 19.5 to 66pp. Using a difference-in-differences framework, I document three findings. First, I find that moonlighting participation elasticities are several times larger than participation elasticities in primary employment. Second, I show that individuals do not substitute primary earnings with secondary jobs, despite the large potential savings. Third, the number of low-income jobs increased rapidly after the reform, and did not result in decreased labor supply among low-income individuals. Finally, I explore mechanisms behind the varying rates of response, and find that hour constraints and job access are key determinants of moonlighting.
[New] "Do Value-Added Taxes Affect International Trade Flows? Evidence from 30 Years of Tax Reforms,"
with Youssef Benzarti
This paper uses all Value Added Tax (VAT) changes across all EU Member States from 1988 to 2016 to estimate the effect of VATs on trade flows. We find small elasticities of trade flows with respect to VATs, in spite of some of the VAT changes being substantial. Our estimates imply that trade flows respond much less to VATs than to tariffs. This finding holds across different time periods, countries and types of reforms. Our results imply that VATs are unlikely to distort trade flows.
This paper uses all Value Added Tax (VAT) changes across all EU Member States from 1988 to 2016 to estimate the effect of VATs on trade flows. We find small elasticities of trade flows with respect to VATs, in spite of some of the VAT changes being substantial. Our estimates imply that trade flows respond much less to VATs than to tariffs. This finding holds across different time periods, countries and types of reforms. Our results imply that VATs are unlikely to distort trade flows.
"Labor Supply Responses to Payroll Taxes in the UK"
I study behavioral responses to changes in marginal tax rates of social security and income taxes. I find that responses depend on individual’s employment status: whether a worker is a wage earner, self-employed, or a proprietor. In line with the existing literature I document weak (but statistically significant) bunching at kink points of the tax schedule among wage earners. Starting from 1999, wage earners accumulate pension credits when they exceed a certain threshold, however, no contributions are due until earnings reach a second, higher threshold. Even 10 years after this reform I find no bunching to the right of the eligibility threshold, suggesting that individuals do not assign a high value to pension benefits. Lack of bunching is persistent across age groups and unlikely to be explained by friction costs as individuals are able to bunch at other kink points. I find strong responses to tax incentives among the self-employed but the responses differ by the type of kink. I find sharp bunching at the first kink, medium bunching at the top kink and weak bunching at the middle kink. Comparing responses before and after a tax reform that changed the magnitude of kinks I find that self-employed individuals aggressively reduce earnings to bunch at the lower, more salient kink points. Finally, I document large income shifting by proprietors: many firm owners report most of income as dividends thus avoiding social security taxes. Nevertheless many proprietors choose to pay themselves sub-optimally high wages thus incurring an unnecessarily high tax liability. I show that some of these proprietors pay multiples of £5,000 or £6,000.
