Using charity donations to identify tax evasion. Too good to be true?
Julie Bjørkheim, OFS scholarship recipient 2018
Who evades taxes? In this thesis, I estimate tax evasion among the self-employed in Norway
with an aim to quantify gender differences in tax evasion. I use the expenditure approach
to asses tax evasion. This method uses data on expenditures to predict true income for
the self-employed and measures evasion as the difference between predicted income and
tax-reported income. I find that the self-employed on average underreport 13% of true
income. This is an average over the years 2013-2016, and the result is driven by cohabiting
households. However, the regression estimates are sensitive with regard to the specification.
Also, the essential assumption of equal propensity to consume charitable contributions does
not seem to hold for single households. Because of this, I argue that charitable contributions
are less fit to indirectly measure tax evasion, compared with food consumption.