Research Seminar PhDCautionary Tales: Celebrities, the News Media, and Usage of Tax Amnesty ProgramsVerena Pagels (Universität Hamburg)
10. November 2016
Verena Pagels (Universität Hamburg), 12:15 - 13:15, Room 0029 (VMP 5)
12:15 - 13:15, Room 0029 (VMP 5)
This study investigates effects of news media on tax payers. Media reports likely affect evaluations of the probability of detection of tax evasion and the severity of penalties, as well as knowledge about legal and illegal behaviors. We compile an original data set for Germany, including regional information on the amounts of tax payers using amnesty regulations to voluntarily disclose taxes they have evaded. The data set also includes counts of news reports published by 6 national and 54 local newspapers, addressing topics related to tax evasion. We exploit exogenous variation in the news coverage resulting from public trials for tax evasion by celebrities to identify the causal effect. According to our baseline specification, instrumental variable estimates indicate that a one standard deviation increase in tax evasion coverage raises the number of self-denunciations by 38%. This finding helps to better understand the effectiveness of tax amnesty programs, and it illustrates the economic implications of publicly trying famous personalities.