- Evaluating the Economic Effects of Flat Tax Reforms Using Synthetic Control Methods (with James Alm), 2016, Southern Economic Journal, 83(2):437–463.
Book Chapters and Conference Proceedings
- Taxpayer Responses to Third-Party Income Reporting: Preliminary Evidence from a Natural Experiment in the Taxicab Industry (with James Alm, Brett Collins, Michael Sebastiani, and Eleanor Wilking), 2017, IRS Research Bulletin, Editor Alan Plumley, Washington, DC.
- Sales and Personal Income Tax Exemptions in Louisiana. (with James Alm). Forthcoming, Tax Reform in Louisiana, Editors James Alm, James Richardson, Steven Sheffrin, Louisiana State University Press.
- Internal Revenue Services and the American Middle Class. (with James Alm). 2017, The American Middle Class: An Economic Encyclopedia of Progress and Poverty, Editor Robert Rycroft, ABC-CLIO/Greenwood Press, Santa Barbara, CA.
- Did Latvia’s Flat Tax Reform Improve Growth? (with James Alm). 2016, National Tax Association Proceedings from the 106th Annual Conference in Taxation
- Can Reform Waves Turn the Tide? Some Case Studies Using the Synthetic Control Method (with Romain Duval, Bingjie Hu, and Prakash Loungani), 2016, IMF Working Paper No. 16/171, Revise and Resubmit, Open Economies Review.
- Media coverage: VoxEU
- When Does Introducing a Value-Added Tax Increase Economic Efficiency? Evidence from the Synthetic Control Method, Tulane University Working Paper No. 1524.
Research in progress
- The Economic and Behavioral Effects of a Value-Added Tax: Firm-level Evidence from France.
Abstract: This paper estimates the causal impact of a VAT on firms’ growth (e.g, output, employment, investment spending, and productivity) and firms’ behavioral responses (e.g, under-reporting of the revenue or over-reporting of the cost to claim undue tax credit). Since firms are not randomly assigned into a VAT, I use Regression Discontinuity Designs (RDD) to create the conditions for a local random experiment by exploiting the VAT rule in France, which mandates all firms with annual sales above EUR 85, 000 to register for a VAT, while firms with sales below EUR 85,000 are not required to register for a VAT. The biggest challenge in using RDD for this study is the lack of data on firms that are below the VAT thresholds (as these thresholds are meant to exclude small firms and most of the surveys exclude small firms as well). I circumvent this data problem by using proprietary dataset called Amadeus that contains rich information on millions of firms for up to 10 years. The results from this study will provide insights on how to improve the administration, enforcement, and ultimately the effectiveness of the VAT system.
- Taxpayer Responses to Third-Party Income Reporting: Evidence from a Natural Experiment in the Taxicab Industry (with James Alm, Brett Collins, Michael Sebastiani, and Eleanor Wilking).
- Supported by IRS Joint Statistical Research Program 2014.
Abstract: This paper uses universe of confidential tax returns data from small businesses to estimate their behavioral responses to Form 1099-K, a novel third-party income reporting law that requires payment companies (e.g. Banks, Visa, MasterCard, and Paypal) to report gross amount of all payment transactions the businesses receive through their payment system to the IRS. Since the Form 1099-K is a federal law that affects all business across the U.S., there is no obvious control group. We exploit the fact that many cities in the U.S. have independently and for reasons not related to Form 1099-K passed laws that mandate taxicabs to install credit card readers in their vehicle (e.g, New York in 2008 and New Orleans in 2012) to construct the control group. The introduction of credit card readers in taxicabs discontinuously increases the share of revenue from credit cards, which are reported in the Form 1099-K. Thus, taxicabs operating in cities with such laws will be affected by Form 1099-K more than those operating in cities without such laws, providing us a very natural control group.
- Taxpayer Responses to Third-party Income Reporting: Evidence from Spatial Variation across the U.S. (with James Alm and Timothy Harris)
- Supported by IRS Joint Statistical Research Program 2016.
Abstract: This project proposes a new method of estimating the impact of Form 1099-K, a novel third-party income reporting law that requires payment companies to report the gross amount of all payment transactions the businesses receive through their payment system to the IRS, on small-business tax compliance. We argue that, if firms are located in a zipcode where the usage of payment cards by consumers is high, then a greater share of the firms’ revenues will be collected through payment cards, and thus a greater share of those firms’ revenues will be third-party reported. Accordingly, using administrative data from various tax returns and information reports, we develop an index of payment card usage at the zipcode level and analyze the geographic variation in the usage of payment cards as an explanation for the variation in tax compliance by small businesses. To further mitigate any potential endogeneity problem, we will apply a research design similar to that used by Bronnenberg et al. (2012), Chetty et al. (2013), and Finkelstein et al. (2016), which will allow us to track the compliance behavior of firms around the year of their move from a high payment cards usage zipcode to a low payment cards usage zipcode (or vice versa).