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New study finds tcja strongly boosted corporate investment, latest work.
How High Are State and Local Tax Collections in Your State?
Contrary to initial expectations, the pandemic years were good for state and local tax collections, and while the surges of 2021 and 2022 have not continued into calendar year 2023, revenues remain robust in most states and well above pre-pandemic levels even after accounting for inflation.
Comparing Europe’s Tax Systems: Individual Taxes
Estonia has the most competitive individual tax system in the OECD for the 10th consecutive year.
2024 Tax Brackets
Explore the IRS inflation-adjusted 2024 tax brackets, for which taxpayers will file tax returns in early 2025.
How Well Do Carbon Taxes Match Their Promise? A New Proposed Metric
While existing carbon taxes are a step towards the right direction in addressing climate change and incentivizing reductions in emissions, there is considerable room for improvement to reach the ideal theoretical carbon tax model.
Testimony: The Costs and Complexity of the Federal Tax Code Demand Reform
Lawmakers should simplify the tax code so that taxpayers can understand the laws and the IRS can administer them with minimum cost and frustration.
Details and Analysis of Making the 2017 Tax Reforms Permanent
Lawmakers will have to weigh the economic, revenue, and distributional trade-offs of extending or making permanent the various provisions of the TCJA as they decide how to approach the upcoming expirations. A commitment to growth, opportunity, and fiscal responsibility should guide the approach.
How Do Taxes Affect Interstate Migration?
Marketplace facilitator laws: past, present, and a better future, excise taxes and fees on wireless services drop slightly in 2023, investment in the united kingdom increased following pro-investment tax reforms, comparing europe’s tax systems: corporate taxes, 2023 european tax policy scorecard, latest blog posts, what’s next for tax competition, assessing the eu tax observatory’s view on profit shifting and the global minimum tax, is eu vat compliance actually improving, dwindling savings and increasing financial stress highlights need for tax reforms, movers and shakers in the international tax competitiveness index.
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2024 State Business Tax Climate Index
In recognition of the fact that there are better and worse ways to raise revenue, our Index focuses on how state tax revenue is raised, not how much. The rankings, therefore, reflect how well states structure their tax systems.
International Tax Competitiveness Index 2023
While there are many factors that affect a country’s economic performance, taxes play an important role. A well-structured tax code is easy for taxpayers to comply with and can promote economic development while raising sufficient revenue for a government’s priorities.
The variety of approaches to taxation among European countries creates a need to evaluate these systems relative to each other. For that purpose, we have developed the European Tax Policy Scorecard—a relative comparison of European countries’ tax systems.
Details and Analysis of a Tax Reform Plan for Growth and Opportunity
How to rein in the national debt, eight state tax reforms for mobility and modernization, how taxing consumption would improve long-term opportunity and well-being for families and children, risks to the u.s. tax base from pillar two, county data shows repealing salt cap would benefit high-income earners.
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- 15 Dec 2020
- Working Paper Summaries
Designing, Not Checking, for Policy Robustness: An Example with Optimal Taxation
The approach used by most economists to check academic research results is flawed for policymaking and evaluation. The authors propose an alternative method for designing economic policy analyses that might be applied to a wide range of economic policies.
- 31 Aug 2020
- Research & Ideas
State and Local Governments Peer Into the Pandemic Abyss
State and local governments that rely heavily on sales tax revenue face an increasing financial burden absent federal aid, says Daniel Green. Open for comment; 0 Comments.
- 12 May 2020
Elusive Safety: The New Geography of Capital Flows and Risk
Examining motives and incentives behind the growing international flows of US-denominated securities, this study finds that dollar-denominated capital flows are increasingly intermediated by tax haven financial centers and nonbank financial institutions.
- 01 Apr 2019
- What Do You Think?
Does Our Bias Against Federal Deficits Need Rethinking?
SUMMING UP. Readers lined up to comment on James Heskett's question on whether federal deficit spending as supported by Modern Monetary Theory is good or evil. Open for comment; 0 Comments.
- 20 Mar 2019
In the Shadows? Informal Enterprise in Non-Democracies
With the informal economy representing a third of the GDP in an average Middle East and North African country, why do chronically indebted regimes tolerate such a large and untaxed shadow economy? Among this study’s findings, higher rates of public sector employment correlate with greater permissibility of firm informality.
- 30 Jan 2019
Understanding Different Approaches to Benefit-Based Taxation
Benefit-based taxation—where taxes align with benefits from state activities—enjoys popular support and an illustrious history, but scholars are confused over how it should work, and confusion breeds neglect. To clear up this confusion and demonstrate its appeal, we provide novel graphical explanations of the main approaches to it and show its general applicability.
- 02 Jul 2018
Corporate Tax Cuts Don't Increase Middle Class Incomes
New research by Ethan Rouen and colleagues suggests that corporate tax cuts contribute to income inequality. Open for comment; 0 Comments.
- 13 May 2018
Corporate Tax Cuts Increase Income Inequality
This paper examines corporate tax reform by estimating the causal effect of state corporate tax cuts on top income inequality. Results suggest that, while corporate tax cuts increase investment, the gains from this investment are concentrated on top earners, who may also exploit additional strategies to increase the share of total income that accrues to the top 1 percent.
- 08 Feb 2018
What’s Missing From the Debate About Trump’s Tax Plan
At the end of the day, tax policy is more about values than dollars. And it's still not too late to have a real discussion over the Trump tax plan, says Matthew Weinzierl. Open for comment; 0 Comments.
- 24 Oct 2017
Tax Reform is on the Front Burner Again. Here’s Why You Should Care
As debate begins around the Republican tax reform proposal, Mihir Desai and Matt Weinzierl discuss the first significant tax legislation in 30 years. Open for comment; 0 Comments.
- 08 Aug 2017
The Role of Taxes in the Disconnect Between Corporate Performance and Economic Growth
This paper offers evidence of potential issues with the current United States system of taxation on foreign corporate profits. A reduction in the US tax rate and the move to a territorial tax system from a worldwide system could better align economic growth with growth in corporate profits by encouraging firms to invest domestically and repatriate foreign earnings.
- 07 Nov 2016
Corporate Tax Strategies Mirror Personal Returns of Top Execs
Top executives who are inclined to reduce personal taxes might also benefit shareholders in their companies, concludes research by Gerardo Pérez Cavazos and Andreya M. Silva. Open for comment; 0 Comments.
- 18 Apr 2016
Popular Acceptance of Morally Arbitrary Luck and Widespread Support for Classical Benefit-Based Taxation
This paper presents survey evidence that the normative views of most Americans appear to include ambivalence toward the egalitarianism that has been so influential in contemporary political philosophy and implicitly adopted by modern optimal tax theory. Insofar as this finding is valid, optimal tax theorists ought to consider capturing this ambivalence in their work, as well.
- 20 Nov 2015
Impact Evaluation Methods in Public Economics: A Brief Introduction to Randomized Evaluations and Comparison with Other Methods
Dina Pomeranz examines the use by public agencies of rigorous impact evaluations to test the effectiveness of citizen efforts.
- 07 May 2014
How Should Wealth Be Redistributed?
SUMMING UP James Heskett's readers weigh in on Thomas Piketty and how wealth disparity is burdening society. Closed for comment; 0 Comments.
- 08 Sep 2009
The Height Tax, and Other New Ways to Think about Taxation
The notion of levying higher taxes on tall people—an idea offered largely tongue in cheek—presents an ideal way to highlight the shortcomings of current tax policy and how to make it better. Harvard Business School professor Matthew C. Weinzierl looks at modern trends in taxation. Key concepts include: Studies show that each inch of height is associated with about a 2 percent higher wage among white males in the United States. If we as a society are uncomfortable taxing height, maybe we should reconsider our comfort level for taxing ability (as currently happens with the progressive income tax). For Weinzierl, the key to explaining the apparent disconnect between theory and intuition starts with the particular goal for tax policy assumed in the standard framework. That goal is to minimize the total sacrifice borne by those who pay taxes. Behind the scenes, important trends are evolving in tax policy. Value-added taxes, for example, are generally seen as efficient by tax economists, but such taxes can bear heavily on the poor if not balanced with other changes to the system. Closed for comment; 0 Comments.
- 02 Mar 2007
What Is the Government’s Role in US Health Care?
Healthcare will grab ever more headlines in the U.S. in the coming months, says Jim Heskett. Any service that is on track to consume 40 percent of the gross national product of the world's largest economy by the year 2050 will be hard to ignore. But are we addressing healthcare cost issues with the creativity they deserve? What do you think? Closed for comment; 0 Comments.
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Psychological Perspectives on Financial Decision Making pp 291–330 Cite as
Tax Compliance: Research Methods and Decision Processes
- Andre Julian Hartmann 3 ,
- Martin Mueller 3 &
- Erich Kirchler 3
- First Online: 22 July 2020
Traditionally, research focuses on individual taxpayers that—when faced with a decision under uncertainty—are assumed to maximize their profits through rational decision processes. However, economic psychology and behavioral economics reveal several anomalies where the observed effects are opposite to the theoretical predictions. Moreover, psychological research provides evidence for the importance of factors such as the understanding of the tax law, attitudes toward taxes and tax morale, personal and social norms, and perception of distributive and procedural justice. In this paper, we provide a review of the research on tax compliance decisions. We address traditional approaches to study compliance decisions and anomalies as well as the psychological determinants of compliance. Since different research methods reveal different results, we describe the arsenal of research methods and their strengths and weaknesses. We pay specific attention to results from process tracing approaches in tax compliance research. We conclude with practical implications for policymakers and researchers in the field.
- Tax compliance
- Tax evasion
- Attitudes toward tax
- Tax compliance decisions
- Slippery slope framework
- Tax compliance anomalies
- Tax compliance research
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Hartmann, A.J., Mueller, M., Kirchler, E. (2020). Tax Compliance: Research Methods and Decision Processes. In: Zaleskiewicz, T., Traczyk, J. (eds) Psychological Perspectives on Financial Decision Making. Springer, Cham. https://doi.org/10.1007/978-3-030-45500-2_13
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Specialized tax research platforms & resources, learning tax research, federal tax statutes, federal legislative history, federal tax regulations, other irs guidance, u.s. tax court, u.s. department of justice -- tax division, treatises, books, and reporters, databases for finding tax-related scholarship (and other types of articles), specific tax journals, tax policy think tanks, online resources, other research guides, contact us, getting started.
This guide is designed to help you find laws and information on tax law issues. Although it focuses on U.S. federal tax law, it does include some information on state and local tax matters as well as some non -U.S. tax information.
The purpose of this guide is to introduce you to a number of useful tax law resources and get you started in the right direction. Legal research requires analysis and synthesis of information, and no one resource will likely provide complete information or data on any given topic.
For many of these databases, you will need to use your Harvard Key to authenticate yourself as a Harvard or HLS-affiliate. For others, you may need to register and create an account to gain access ( e.g. , Lexis, Westlaw, and Bloomberg Law). If you have any trouble accessing a database, please contact the library.
In addition, you should consider looking at the following tax-centric research platforms/resources:
- Checkpoint (Thomson Reuters) Tax topics include federal, state, international, pension & benefits, estate planning, payroll, and more. Includes the US Tax Reporter (also available on Westlaw). NOTE: HLS-Affiliates (students, faculty & staff) can use the 1st link in the HOLLIS record for general access to Checkpoint (after providing their HLSMe credentials). If STUDENTS would like to create a personal account (to save searches, create alerts, etc.), they can do so by clicking on the 2nd link in the HOLLIS record. If FACULTY or STAFF would like to create a personal account, they should contact Lisa Lilliott Rydin at [email protected].
- Cheetah (Wolters Kluwer) Cheetah for Tax Law combines authoritative content, expert analysis, practice tools, and current awareness for legal tax professionals to gain insights on today’s most challenging tax matters. (Formerly known as Intelliconnect.) Includes the Standard Federal Tax Reporter Available online using the "View Online" link in the HOLLIS record above.
- TaxNotes - Federal Available online using the "View Online" link in the HOLLIS record above. NOTE: You must first create an account using an HLS-networked computer. This can be done on-campus or remotely by using a VPN connection.
- Tax Notes - State Available online using the "View Online" link in the HOLLIS record above. NOTE: You must first create an account using an HLS-networked computer. This can be done on-campus or remotely by using a VPN connection.
- Tax Notes - International Available online using the "View Online" link in the HOLLIS record above. NOTE: You must first create an account using an HLS-networked computer. This can be done on-campus or remotely by using a VPN connection.
- IBFD - Tax Research Platform Global tax database, including country-specific tax guides, primary sources of law, tax treaties, global tax topics, books, journal articles and papers. Available online using the "View Online" link in the HOLLIS record above.
- Getting the Deal Through (Lexology) Not exactly a "research platform" but the Getting the Deal Through (GTDT) module of Lexology lets you quickly compare laws across different countries and includes such Topics as "State and Local Taxes," "Tax Controversy" and "Tax on Inbound Investment."
- Organisation for Economic Co-operation and Development (OECD) -- Tax Tax information, data, and other information regarding OECD member countries.
- European Commission -- Taxation and Customs Union Information on EU tax policies.
Below are some books that can help you better understand how Tax Law resources are organized and where you can find them.
- Federal Tax Research, by William A. Raabe KF241.T38 W47 2006x (Reference)
- Federal Tax Research: Guide to Materials and Techniques, by Gail Levin Richmond & Kevin M. Yamamoto KF241 .T38 R53 2018 (Reference)
- Federal Tax Research, by Joni Larson & Dan Sheaffer KF241 .T38 L37 2011 (Reference)
Primary Sources/Federal Government Resources
- U.S. Code (official U.S. federal government site) See "Title 26" for the Internal Revenue Code (a/k/a "The Code").
- U.S. Code (Legal Information Institute, at Cornell University) An alternative site for the U.S. Code (again, Title 26).
In addition to standard legislative history resources (e.g., ProQuest Congressional's Legislative Insight for federal legislative history), you should check out:
- Taxation & Economic Reform in America, Parts I & II (HeinOnline) This historical archive contains thousands of volumes and millions of pages of legislative history materials and other documents. It includes the complete Carlton Fox Collection which contains nearly 42 years of historical legislation related to the internal revenue laws from 1909-1950, as well as other legislative histories related to taxation, economic reform, and stimulus plans.
- The Joint Committee on Taxation's "Blue Book" Not exactly "legislative history".... At the end of each Congress, the Joint Committee Staff, in consultation with the staffs of the House Committee on Ways and Means and the Senate Committee on Finance, prepare explanations of the enacted tax legislation. The explanation follows the chronological order of the tax legislation as signed into law. For each provision, the document includes a description of present law, explanation of the provision, and effective date. Present law describes the law in effect immediately prior to enactment. It does not reflect changes to the law made by the provision or subsequent to the enactment of the provision. For many provisions, the reasons for change are also included.
- Old Editions of the Standard Federal Tax Reporter (HeinOnline) PDFs of the superseded, loose-leaf volumes (1917-1985).
- Code of Federal Regulations (official U.S. federal government site) Final IRS regulations can be found in Title 26 of the CFR. This compilation of regulations is updated annually, on a staggered basis.
- e-CFR An alternative site for final federal regulations (this compilation, while not "official" is more user-friendly and updated faster). Tax regulations still under "Title 26."
The Federal Register is where all federal agency rules and regulations are initially published (when first proposed -- perhaps re-proposed -- and later finalized). Agencies are required to include summaries of proposed regulations and the public comments received thereon, as well as an agency's reaction to the public comments when finalizing a regulation. This is typically done in the preamble to a finalized or re-proposed regulation.
- Federal Register The official government source for the Federal Register.
- FederalRegister.gov The Office of the Federal Register (OFR) of the National Archives and Records Administration (NARA), and the U.S. Government Publishing Office (GPO) jointly administer the FederalRegister.gov website. This website was developed to make it easier for citizens and communities to understand the regulatory process and to participate in Government decision-making.
- Internal Revenue Bulletins The Internal Revenue Bulletin (IRB) is the official publication for announcing Revenue Rulings, Revenue Procedures, Notices & Announcement. These are directed to all taxpayers and may be relied upon. The IRB is published weekly and through 2008 was consolidated into semi-annual Cumulative Bulletins (CB).
NOTE: IRS guidance/rulings requested by individual taxpayers ( e.g. , Private Letter Rulings, Technical Advice Memoranda, and Chief Counsel Advice) may not be relied upon by others and are not published in the IRB.
Nevertheless, they may provide insight regarding the IRS's views on various matters. They may be obtained by the public via FOIA requests and can often be found on the IRS.gov (see the IRS's FOIA Library ) or by using commercial legal research platforms.
The IRS website is not the easiest site to navigate but it does contain a lot of useful information. For example:
- Understanding IRS Guidance -- A Brief Primer Explains the difference between Regulations, Revenue Rulings, Revenue Procedures, Private Letter Rulings, Technical Advice Memoranda, Notices, and Announcements.
- Forms, Instructions, and Publications IRS Publications (on a variety of tax topics) and the Instructions to IRS Forms can often help you understand the IRS's view of tax laws. Keep in mind that these are NOT primary sources of law; however, they can be helpful.
- Tax Code, Regulations, and Official Guidance NOTE: It appears this information is no longer being updated by the IRS; however, you may be able to find useful historical information.
- Basic Tools for Tax Professionals A collection of IRS links likely to be of use to a tax professional, including a link to the Internal Revenue Manual.
- Internal Revenue Manual How the IRS is organized and how it operates. For example, procedures for examining returns, conducting audits, "Offers in Compromise," technical guidelines, etc.
- Tax Statistics Here you will find a wide range of tables, articles, and data that describe and measure elements of the U.S. tax system.
- Tax Topics Source for general individual and business tax information.
- FAQs Frequently Asked Questions (and their answers).
- U.S. Tax Court Website The official website of the U.S. Tax Court, containing information about the court and its cases.
- US Dept. of Justice -- Tax Division Website The Tax Division's mission is to enforce the nation's tax laws fully, fairly, and consistently, through both criminal and civil litigation, in order to promote voluntary compliance with the tax laws, maintain public confidence in the integrity of the tax system, and promote the sound development of the law.
Look under "Secondary Sources" (or "Secondary Materials") in the Tax Practice Center/Area of a legal research platform to find treatises and other materials about tax-related topics. Below are some specific titles:
- Mertens Law of Federal Income Taxation Available online via Westlaw using the link above.
- Bittker, McMahon & Zelenak: Federal Income Taxation of Individuals KF6369 .B5722 Also available online via Westlaw using the link in the HOLLIS record above.
- Bittker & Eustice's Federal Income Taxation of Corporations and Shareholders KF6464 .B53x (Available in the Reading Room Stacks and on Reserve at the Circulation Desk) Also available online via Westlaw and Checkpoint using the "View Online" link in the HOLLIS record above.
- Hill and Mancino: Taxation of Exempt Organizations Available online via Checkpoint.
- Saltzman & Book: IRS Practice & Procedure KF6300 .S262x Also available online via Westlaw and Checkpoint.
- Tax Fraud and Evasion: Offenses, Trials, Civil Penalties (Vol. 1) Available online via Checkpoint.
- Tax Fraud and Evasion: Money Laundering, Asset Forfeiture, and Related Topics (Vol. 2) Available online via Checkpoint.
- Standard Federal Tax Reporter (Cheetah) A Code section-arranged reporter covering Federal income tax law that allows you to navigate between its component parts. The full text of an IRC section, with brief legislative history notes, is followed by the relevant committee reports in full text, final, temporary and proposed regulations, editorially prepared explanations, and annotations. Caution lines and notes are used to alert you to special circumstances concerning a Code section, regulation or annotation. Also included are practice aids, tax rates and other tables, a tax calendar and separate tax planning sections for individuals and businesses, as well as full-text IRS documents (regulations, revenue rulings and procedures), case annotations and other source documents for the current year.
- U.S. Tax Reporter (Checkpoint) On Checkpoint's Home Page, look for "USTR Code Section" (under "My Quick Links"). Another Code section-arranged reporter that provides a comprehensive, up-to-date source of federal tax law, including the Internal Revenue Code, regulations, committee reports, cases, rulings, explanations, and annotations of cases and rulings. Also available online via Westlaw.
- Understanding Federal Income Taxation, by J. Martin Burke & Michael K. Friel KF6369.85 .B87 2019 (Available in the Reading Room Stacks and the Study Guide Collection @ the Circulation Desk)
- Chirelstein's Federal Income Taxation: A Law Student's Guide to the Leading Cases and Concepts KF6369 .C43 2018 (Reserve)
In addition to searching for tax-related law reviews and journals using Westlaw , Lexis Advance , or Bloomberg Law you can try these alternatives:
- HeinOnline's Law Journal Library Browse by Subject and select "Taxation" to see all the tax-related journals you can search.
- Business Source Complete A database of citations to summaries and full text articles from academic journals, magazines, and trade publications.
- ProQuest's Accounting, Tax & Banking Collection This database brings together highly ranked global and scholarly journals with other key resources for locating quick and precise results covering current news and topics, as well as the trends and history influencing important financial issues of the day.
- SSRN (Social Science Research Network) SSRN is a worldwide collaborative of over 352,400 authors and more than 2.2 million users that is devoted to the rapid worldwide dissemination of research. It provides access to new scholarship including working papers.
- NBER Working Papers The National Bureau of Economic Research is a private, nonprofit, nonpartisan research organization based in Cambridge, Massachusetts.
- Journal of Taxation HJ 2360 .J6 Available online via Westlaw and Checkpoint.
- Tax Law Review K24 .A917 Available online via Westlaw & Lexis Advance.
- The Tax Lawyer (ABA Publication) Available online via Westlaw & Lexis Advance.
- Corporate Taxation Available online via Checkpoint.
- Taxation of Exempts Available online via Checkpoint.
- Daily Tax Report Available online via Bloomberg Law using the "View Online" link in the HOLLIS record above.
- Tax Notes Available online using the "View Online" link in the HOLLIS record above. NOTE: You must first create an account using an HLS-networked computer. This can be done on-campus or remotely by using a VPN connection.
- Law360 - Tax Requires HLSMe Authenticiation.
- IRS's e-News for Tax Professionals Information on how to subscribe to get the IRS's latest news.
- Politico's Morning Tax Newsletter Subscribe to a daily newsletter.
- International Tax News PWC's International Tax News provides a succinct monthly analysis of select legislative changes, case law and treaty news from around the globe.
- American Tax Policy Institute (ATPI) ATPI supports nonpartisan scholarly research, analysis and discussion of U.S. federal, state and local, and international tax policy issues.
- Tax Foundation The Tax Foundation is the nation’s leading independent tax policy nonprofit. Since 1937, our principled research, insightful analysis, and engaged experts have informed smarter tax policy at the federal, state, and global levels. For over 80 years, our goal has remained the same: to improve lives through tax policies that lead to greater economic growth and opportunity.
- Tax Policy Center (TPC) The Urban-Brookings Tax Policy Center aims to provide independent analyses of current and longer-term tax issues and to communicate its analyses to the public and to policymakers in a timely and accessible manner. The Center combines top national experts in tax, expenditure, budget policy, and microsimulation modeling to concentrate on overarching areas of tax policy that are critical to future debate.
- TaxProf Blog
- Tax Appellate Blog (Miller & Chevalier) The Tax Appellate Blog is intended to be a resource for information on important tax cases under consideration in the appellate courts. It will feature insightful commentary on the issues and provide a dedicated site for following the progress of these cases.
- Procedurally Taxing Procedurally Taxing considers developments in issues relating to tax procedure and tax administration.
- Tax Controversy Watch (Blank Rome LLP) Blank Rome’s Tax Controversy Watch blog is focused on addressing and providing a comprehensive review of the latest developments in the tax controversy field.
- TaxVox (Tax Policy Center)
State Tax Resources
Individual state tax agencies can provide a lot of helpful state tax information. The Federation of Tax Administrators provides a list of links to the websites for state tax agencies.
You can also find a number of state-specific tax resources if you look for state law content on Lexis Advance or Westlaw.
See below for more useful links:
- All States Tax Guide (RIA) Available via Westlaw using the link above.
- Bender's State Taxation: Principles and Practice Available online via Lexis Advance using the link above.
- Hellerstein & Hellerstein: State Taxation (WG&L) Available online via Westlaw and Checkpoint using the link above.
- Tax Foundations's Center for State Tax Policy The Tax Foundation’s Center for State Tax Policy produces and markets timely and high-quality data, research, and analysis on state fiscal issues that influence the debate toward economically principled tax policies.
- NYU Conference on State and Local Taxation Each December the biggest names in state and local taxation gather in New York City and offer presentations on cutting-edge issues to their fellow practitioners at the New York University Institute on State & Local Taxation. The speakers then develop their presentations into law review-quality articles, published by Matthew Bender. Though scholarly, the articles are also very practical, laden with examples, tax-planning tips, and commentary.
- Bloomberg Law's Tax Practice Center Select the "State" tab at the top for a collection of state tax resources. In particular, the "State Tax Portfolios" and various "Chart Builders."
- Checkpoint (Thomson Reuters) In addition to state tax law resources, see the "Create-a-Chart" Tool.
Below are some other Research Guides you may find useful, depending on your area of research:
- Federal Tax Research (NYU Law Library) A ton of resources across a broad range of tax-related topics. See tabs for "Statistics," "Foreign & International Tax," "Dictionaries, Directories, & CRS Reports," and more.
- Foreign and International Tax Law Research (NYU Law Library)
- International and Foreign Tax Law Research Guide (Georgetown Law Library)
- History of the U.S. Income Tax (Library of Congress)
NOTE: When using a research guide prepared by a different library, the links may not work for you. However, if you find a title of interest, you may be able to locate it in our collection by using HOLLIS (Harvard's Library Catalog). If not, we may be able to obtain the resource through BorrowDirect or Interlibrary Loan .
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Office of Economic Policy working and research papers offer the Office’s staff an opportunity to present original research. They are intended to generate discussion and critical comment while informing and improving the quality of the analysis conducted by the Office. Papers are works in progress and subject to revision. Views and opinions expressed are those of the authors and do not necessarily represent official Treasury positions or policy.
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Administrative data and methodologies for tax policy
Synthesis paper 3 Apr 2023 Tax , State and Tax for Growth
This synthesis paper outlines the general value of administrative data for evidence-based policy design, reviews the main research methodologies in public finance which use administrative data, and discusses the best practices and challenges with managing administrative data and developing policy-research engagements.
PDF document • 27.68 MB
The growing literature on state capacity places the ability to collect taxes in an efficient and equitable manner at the heart of how state-building occurs along the development path (Besley and Persson 2013). Governments in developing countries are currently characterised by limited tax capacity — low level of taxes collected, in an inefficient manner, and with limited redistribution. Understanding which policies are effective in alleviating capacity constraints requires an evidence-based approach. Evidence-based policy design is an approach where rigorous methods and high-quality data are combined to identify the policy problems and its underlying failures and, in turn, evaluate policy solutions using experimental and quasiexperimental empirical designs.
In the context of taxation, the rise of evidence-based policy design in developing countries is closely related to the increased use of administrative data in research and policy analyses. Administrative data are the set of microeconomic datasets that governments continuously create for the administration of their tax and transfer programmes. In this review, we outline the general value of administrative data for evidence-based policy design, review the main methodologies in public finance which use administrative data, and discuss best-practices and challenges with managing administrative data and creating policy-research engagements.
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Electronic invoice monitoring systems to improve tax compliance: evidence from pakistan, zambia's debt crisis is affecting its ability to collect tax, tax for growth (t4g) launch, why do tax research and evidence matter for economic growth.
A Systems View Across Time and Space
- Open access
- Published: 16 February 2021
Factors influencing taxpayers to engage in tax evasion: evidence from Woldia City administration micro, small, and large enterprise taxpayers
- Erstu Tarko Kassa ORCID: orcid.org/0000-0002-8199-4910 1
Journal of Innovation and Entrepreneurship volume 10 , Article number: 8 ( 2021 ) Cite this article
The main purpose of this paper is to investigate factors that influence taxpayers to engage in tax evasion. The researcher used descriptive and explanatory research design and followed a quantitative research approach. To undertake this study, primary and secondary data has been utilized. From the target population of 4979, by using a stratified and simple random sampling technique, 370 respondents were selected. To verify the data quality, the exploratory factor analysis (EFA) was conducted for each variable measurements. After factor analysis has been done, the data were analyzed by using Pearson correlation and multiple regression analysis. The finding of the study revealed that the relationship between the study independent variables with the dependent variable was positive and statistically significant. The regression analysis also indicates that tax fairness, tax knowledge, and moral obligation significantly influence taxpayers to engage in tax evasion, and the remaining moral obligation and subjective norms were not statistically significant to influence taxpayers to engage in tax evasion.
In developed and developing countries, business owners, government workers, service providers, and other organizations are forced by the government to pay a tax for a long period in human being history, and no one can escape from the tax of the country. To support this, there is an interesting statement mentioned by Benjamin Franklin “nothing is certain except death and taxes”. This statement confirmed that every citizen should be subjected to the law of tax, and they are obliged to pay the tax from their income. To build large dams, to construct transportation infrastructures, and to provide quality social services for the community, collecting a tax from citizens plays a significant role for the governments (Saxunova and Szarkova, 2018 ).
Tax is the benchmark and turning point of the country’s overall development and changing the livelihoods and enhancing per capital income of the individuals. The gross domestic product of the developed countries and average revenue ratio were 35% in the year 2005, whereas in developing countries the share was 15% and in third world countries also not more than 12% (Mughal, 2012 ).
In the developing world, countries have no system to collect a sufficient amount of tax from their taxpayers. The expected amount of revenue cannot be enhanced due to different reasons. Among the reasons tax operation of the system may not be smooth, tax evasion and lack of awareness creation for the taxpayers are common in the developing world, and citizens are not committed to paying the expected amount of tax for their countries (Fagbemi et al., 2010 ). In today’s world, this remains very much the same as persons now pay taxes to their governments. As the world has evolved, tax compliance has taken a back seat with tax avoidance and tax evasion being at the forefront of the taxpayer’s main objective. Tax avoidance is the use of legal means to reduce one’s tax liability while tax evasion is the use of illegal means to reduce that tax liability (Alleyne & Harris, 2017 ). Tax evasion is a danger to the community; the countries and international organizations have been making an effort to fight undesirable phenomena related to taxation, the tax evasion, or tax fraud (Saxunova and Szarkova, 2018 ).
Tax evasion may brings a devastating loss for the country's GDP at the micro level, and it became a debatable and a special concern for tax collector authorities (Aumeerun et al., 2016 ). The participants in tax evasion activity critized by different individuals and groups by considering the loss that brings to the country economy (Alleyne & Harris, 2017 ).
According to Dalu et al., ( 2012 ) state that in the Zimbabwe tax system there are identical devils tax evasion and tax avoidance that create a problem for the government to collect a tax from taxpayers. Like Zimbabwe, many nations have faced challenges to cover the annual budget and to construct different infrastructures due to the budget deficit created by tax evasion (Alleyne & Harris, 2017 ; Turner, 2010 ).
Scholars especially economists agreed that tax evasion may be considered a technical problem that exists in the tax collection system, whereas psychologists believed that tax evasion is a social problem for the countries (Terzić, 2017 ).
Tax evasion practices are more worsen in developing countries than when we compare against the developed countries. Tax evasion is like a pandemic for the countries because they are unable to control it. Therefore, governments were negatively affected by tax evasion to improve the life standard of its citizens and to allocate a budget for public expenditure, and it became a disease for the country’s economy and estimated to cost 20% of income tax revenue (Ameyaw et al., 2015 ; degl’Innocenti & Rablen, 2019 ; Palil et al., 2016 ).
Several factors may lead taxpayers to engage in tax evasion. Among the factors, tax knowledge, tax morale, tax system, tax fairness, compliance cost, attitudes toward the behavior, subjective norms, perceived behavioral control, and moral obligation are major factors (Alleyne & Harris, 2017 ; Rantelangi & Majid, 2018 ). Other factors have also a significant effect on taxpayers to engage in tax evasion practice such as capital intensity, leverage, fiscal loss, compensation, profitability, contextual tax awareness, interest rate, inflation, average tax rate, gender, and ethical tax awareness on tax evasion (Annan et al., 2014 ; AlAdham et al., 2016 ; Putra et al., 2018 ).
According to Woldia City Administration Revenue Office annual report ( 2019/2020 ) from July 1, 2019, to June 30, 2020, 232,757,512 birr was planned to be collected from taxpayers; however, the office was able to collect only 198,537,785.25 birr; however, the remaining 34,219,726.75 birr have not been collected by the office from the taxpayers. The reason behind this was there might be some factors that lead to taxpayers not to pay the annual tax from their annual income. Based on the review of the previous studies and by diagnosing the tax collection system in the city administration, the researcher identified the gaps. The first gap that motivated the researcher to undertake this study is that the prior studies did not address the factors that influence the tax collection system of Ethiopia, specifically, there is no research result that was able to show which factors influence taxpayers to engage in tax evasion in the Woldia city administration. The other gap is the previous study focused on the demographic, economic, social, and other factors. However, this study mainly focused on the behavioral and other factors that lead taxpayers to engage in tax evasion.
To indicate the benefit of this study, the study specifies on which critical factors the authority will focus on to enhance annual revenue and to aware tax payers of the devastating impact of tax evasion. Moreover, the paper may bring new insights on tax evasion influential non-economic factors that the researchers may give more emphasis on the upcoming researches. This paper will also contribute innovative ways to know the reasons why tax payers engage in tax evasion and inform the authority at which factors they will struggle to reduce their influence and to enhance revenue. The study can be an evidence that the tax authority should launch innovative techniques to control tax evasion practices. Moreover, applying fair tax system in the collectors’ side, the enterprises become innovative and will expand their business.
To sum up, in this study, the researcher examined which factor (tax knowledge, tax fairness, subjective norms, moral obligation, and attitude towards the behavior) influences taxpayers to engage in tax evasion activities. Based on the above discussion, the objective of the study is to examine factors that influence taxpayers to engage in tax evasion in Woldia city administration.
Tax and tax evasion.
Tax is charged by the government to the business, governmental organization, and individual without any return forwarded from the authority. Tax can be categorized as direct tax which is collected from the profit of the companies and the incomes of individuals, and the other category of tax is an indirect tax collected from consumers’ payment (James and Nobes, 1999 ).
Tax evasion is a word explaining individuals, groups, and companies rejecting the expected amount of payment for the authority. It is a criminal offense on the view of law (Nangih & Dick, 2018 ). The overall procedure of tax collection faced different challenges especially tax evasion the most important one. Tax evasion is done intentionally by taxpayers by avoiding and hiding different documents that become evidence for the tax collection authorities. It is simply an illegal act to pay the true amount of the tax (Aumeerun et al., 2016 ; Storm, 2013 ). Tax evasion is a crime that is able to distort the overall economic, political, and social system of the country. The economic aspect of tax evasion affects fair distribution of wealth for the citizens. The social aspect also creates different social groups motivated by tax evasion discouraged by these individuals due to unfair competition (AlAdham et al., 2016 ). Tax evasion is a mal-activity that reduces the amount of tax paid by the payers. Perhaps the taxpayers who engaged in evasion activity may be supported by the legislative of the country (Kim, 2008 ; Putra et al., 2018 ; Allingham & Sandmo, 1972 ). According to Al Baaj et al. ( 2018 ) argument, there are two types of tax evasions. The first one is the legal evasion or tax avoidance which is supported by the legislation of the countries and the right is given for the taxpayer, but it is not constitutional (Gallemore & Labro, 2015 ; Zucman, 2014 ).
Theoretical reviews on factors affecting tax evasion
The illegal activity done by taxpayers has many determinants that lead them to engage in tax evasion. Among the factors that trigger taxpayers who participate in this activity are the economic factors. Under the economic factors, business sanctions, business stagnation, and the amount of tax burden are considered as influential factors. On the other hand, legal factors, social factors, demographic factors, mental factors, and moral factors are the most important factors (Saxunova and Szarkova, 2018 ). Many factors determine the taxpayers’ interest to engage in tax evasion. Among the factors, the following are considered under this review.
The factors that able to influence taxpayers to engage in tax evasion are moral obligation . It is a principle and a duty of taxpayers by paying a reasonable amount of tax for the tax authorities without the enforcement of others. It is an intrinsic motivation of payers paying the tax (Sadjiarto et al., 2020 ). When taxpayers have low tax morals, they will become negligent to pay their allotted tax, and they will engage in tax evasion (Alm & Torgler, 2006 ; Frey & Oberholzer-Gee, 1997 ; Torgler et al., 2008 ). According to Feld and Frey ( 2007 ), when tax officials are responsible and provide respect in their duties toward taxpayers, tax morale or the honesty of taxpayers will increase. Tax morals may be affected by a demographic and another factor like income level, marital status, and religion (Rantelangi & Majid, 2018 ). It is the determinant behavior of tax payers whether they participate or not. Tax morals can affect positively taxpayers to engage in tax evasion (Nangih & Dick, 2018 ; Terzić, 2017 ). It is known that taxes levied by the concerned authority are ethical. As cited by Ozili ( 2020 ), McGee ( 2006 ) argues that there are three basic views on the ethics and moral of tax evasion. The first view is tax evasion is unethical and should not be practice by any payer, the second argument deals that the state is illegal and has no moral authority to take anything from anyone, and the last argument is tax evasion can be ethical under some conditions and unethical under other situations; therefore, the decision to evade tax is an ethical dilemma which considers several factors (Robert, 2012 ). Therefore, the discussion leads to the following hypothesis:
H 1 . Moral obligation has a negative influence on taxpayers to engage in tax evasion.
The other factor that influences taxpayers to engage in tax evasion is tax fairness . Tax fairness is a non-economic factor that determines the tax collection of the country (Alkhatib et al., 2019 ). It is known that the tax collection procedures, principles, and implementation must be fair. Unethical behavior may happen due to the unfairness of the tax collection process. The fairness of tax may influence payers positively to pay the tax. When the tax rate is not reasonable and fair, the payers will regret to engage in the tax evasion practices and they will inform authorities their annual income without denying the exact amount. Considering the ability of paying or acceptable tax rates helps to maintain the fairness of the taxation system (Rantelangi & Majid, 2018 ). The governments choose to levy in what amounts and on whom will pay a high tax rate (Thu, 2017 ). The tax rate is a factor that induces taxpayers to pay less amount from their income. The rate of tax should be fair and reasonable for the payers (Ozili, 2020 ). As cited by Gandhi et al. ( 1995 ) the Allingham and Sandmo’s model, Allingham and Sandmo ( 1972 ) shows that the tax rate on payment can be positive, zero, or negative, which implies that an increase in the tax rate may cause the tax payment to increase, remain the same, or decrease. The theoretical literature could not evidence the claim that an increase in the tax rate will lead to an increase in tax evasion (Gandhi et al., 1995 ). The fairness of tax is controversial and argumentative because there may not happen a similar amount of tax for all payers (Abera, 2019 ). Thus, based on this ground the study hypothesis would be:
H 2 . Tax fairness has a positive influence on taxpayers to engage in tax evasion.
Tax knowledge is vital for taxpayers to know the cause and effect brought to them to engage in tax evasion. If tax payers are well informed about tax evasion, their participation in tax evasion would be infrequent; the reverse is true for a taxpayer who is not well informed. Tax-related information should give more emphasis to enhance the knowledge of taxpayers and experts of the authority (Poudel, 2017 ). Tax knowledge is a means to enhance the revenue of the country from the side of tax payers (Sadjiarto et al., 2020 ). If the authorities cascade different training for taxpayers about tax evasion and other tax-related issues, taxpayers become reluctant to engage in tax evasion (Rantelangi & Majid, 2018 ). Tax knowledge is a determinant factor for the taxpayer to engage and retain from the tax evasion activities (Abera, 2019 ). When taxpayers are undertaking their routine tasks without tax knowledge, they may involve in certain risks that expose them to engage in tax evasion (Thu, 2017 ). Thus, the discussion leads to the following hypothesis:
H 3 . Tax knowledge has a negative influence on taxpayers engaged in tax evasion.
The stakeholders, government experts, families, individuals, groups, and peers influence taxpayers whether they engaged in tax evasion or not (Alleyne & Harris, 2017 ). As cited by Alkhatib et al. ( 2019 ), the influence of peer groups on tax taxpayers is high, thus affecting the taxpayers’ preferences, personal values, and behaviors to engage in tax evasion (Puspitasari & Meiranto, 2014 ). The stakeholders around the taxpayers might be motivators to push taxpayers in the criminal act of tax evasion. This act called subjective norms meant that the payers are influenced by peers and other stakeholders. When the tax payer is reluctant to pay a tax for the authority, his/her friends are more likely to hide tax. As cited by Abera ( 2019 ), there is a strong relationship between social norms and subjective norms with tax evasion and affects the small business taxpayers (Nabaweesi, 2009 ). The above discussion can support the following hypothesis of the study:
H 4 . Subjective norms have a positive influence on taxpayers to engage in tax evasion.
The other factor that influences taxpayers to engage in tax evasion is an attitude towards the behavior of taxpayers. Attitude is a means of evaluating the activities whether they are positive or negative of any object. Many studies have been done by different scholars by defining and identifying the relationship between the attitudes of taxpayers with tax evasion (Alleyne & Harris, 2017 ). If the attitude of taxpayers towards taxation is negative, they will be reluctant to pay their obligation to the authority; the reverse is true when taxpayers have positive attitudes towards taxation (Abera, 2019 ). Based on the above discussion, the hypothesis of the study would be as follows:
H 5 . Tax payers’ attitude towards the behavior has a positive influence on taxpayers to engage in tax evasion.
Conceptual framework of the study
The researcher identified the variables and presented the relationship between independent and dependent variables as follows (Fig. 1 ):
Conceptual framework of the study. Adapted from Alleyne and Harris ( 2017 ) and Rantelangi and Majid ( 2018 )
Materials and methods
The researcher applied descriptive and explanatory research design to carry out this study. The explanatory research design enables the researcher to show the cause and effect relationship between independent and dependent variables, and the descriptive research also helps to describe the event as it is. The quantitative approach has been followed by the researcher to analyze and interpret the numerical data collected from the respondents. The researcher used primary and secondary data. The primary data was collected from the respondents by using questionnaires, and the secondary data was also collected from the reports, websites, and other sources.
The target population of the study was 4979 taxpayers (micro, small, and large enterprises). From the total taxpayers, 377 are categorized under level “A,” 207 are under level “B,” and the remaining 4395 taxpayers are categorized under level “C”. From the target population by using a stratified sampling technique, the respondents have been selected. The target population has been divided by the level of taxpayers; after dividing the population by level, the researcher applied a simple random sampling technique to select respondents. To identify the target participants or sample size in this study, the researcher used Yamane’s ( 1967 ) formula. Hence, the formula is described as follows:
where N = target population, n = sample size, e = error term
Based on the sample size, the respondents have participated proportionally as follows from each level. The total population was divided by strata based on the level categorized by the authorities. By using a simple random sampling technique, 28 respondents were from level “A,” 15 respondents from level “B,” and 327 respondents from level “C” have participated.
Regarding data collection instruments , the data was collected by self-administered standardized questionnaires. The variable of the study a moral obligation was measured by 4 items; after conducting factor analysis, the fourth variable or questionnaire has been removed and after that correlation and regression analysis has been done for 3 items; the value of Cronbach’s alpha was .711; the other factor attitude towards the behavior was measured by 4 items with a value of .804 Cronbach’s alpha; the third variable subjective norms was also measured by 4 items; the value of Cronbach’s Alpha was .887, and tax evasion was measured by 5 items; the Cronbach’s alpha value was .868. For the above-listed variables, the questionnaires were adapted from Alleyne and Harris ( 2017 ), and the remaining variable tax fairness was measured by 7 items, the Cronbach’s alpha value was .905, the items were adapted from Benk et al. ( 2012 ), and the last variable tax knowledge was measured by 5 items. However, after conducting factor analysis, the fifth item has been removed due to low value of the variable. After the removal of the fifth item, the Cronbach’s alpha value for the remaining items was .800, the items were adapted from Poudel ( 2017 ). For all variables, the researcher has used a five-point Likert scale from strongly agree to strongly disagree.
To analyze the collected data, the researcher used descriptive statistics analysis, factor analysis, correlation analysis, and multiple regression analysis to know the result of variables by using SPSS Version 22. Moreover, the model of the study is described as follows:
where Y = tax evasion, X 1 = moral obligation, X 2 = tax fairness, X 3 = tax knowledge, X 4 = subjective norms, and X 5 = attitude towards the behavior, β = beta coefficient, B 0 = constant, e = other factors not included in the study (0.05 random error).
Results and discussion
Level of respondents.
As indicated in Table 1 from the total respondents, 88.4% are categorized under level “C,” 4.1% are leveled under “B,” and the remaining 7.6% of respondents have been categorized under level “A”.
Factor analysis of the study variables
To undertake exploratory factor analysis, the data should fulfill the following assumptions. The first assumption is the variables should be ratio, interval, and ordinal; the second one is within the variables there should be linear associations; the third assumption is a simple size should range from 100 to 500; and the last assumption is the data without outliers. Thus, this study data have been checked by the researcher whether the data meets the assumption or not. After checking the assumptions, factor analysis was conducted as follows.
KMO and Bartlett’s test
Conducting KMO and Bartlett’s test is a precondition to conduct the factor analysis of the study measuring variables. KMO measures the adequacy of the sample of the study. In the result reported in Table 2 , the value was 0.883 and enough for the factor analysis. Related with Bartlett test as shown in Table 2 , the value is 5727.623 ( p < 0.001), which reveals the adequacy of data using factor analysis.
As shown in Table 3 , factors were extracted from study data; there was a linear relationship between variables. From the table, we can understand that 6 variables have more than one eigenvalue. The first factor scored the value 31.782 of the variance, the second value is 11.739 of the variance, the third factor scored 8.246 of the variance, the fourth factor accounts for 6.725 of the variance, the fifth factor also accounts for 5.233, and the last factor scored 4.123 of the variance. All six factors were explained cumulatively by 67.85% of the variance.
As shown in the Fig. 2 , the scree plot starts to turn down slowly at the low eigenvalue which is less than 1. The six factors eigenvalue is greater than one.
Scree plot. Source: own survey (2020)
The pattern matrix is shown in Table 4 which is able to show the loading of each variable and the relationship of variables in the study. The highest value among the factors measured the variable considerably. The cutoff point of loading was set at .35 and above. Based on the loading cutoff point except two factors, all are significant and analyzed under this study. From the six variables (five independent and one dependent) incorporated under this study, the identified factors show that how significantly enough to measure the situation. These factors have scored greater than 1 eigenvalue and able to explain 67.85% of the variance. In general, the detail variables and their factor are described as follows:
The first component tax fairness has 7 factors; the eigenvalue is 8.58 and able to explain 31.78 of the total variance. In this component, the highest contributed factor was item TF3 (weight = .925), TF5 (weight = .865), TF1 (weight = .859), TF2 (weight = .778), TF4 (.668), TF6 (weight = .614), and TF7 (weight = .568). The second component was tax evasion and has 5 items; the eigenvalue is 3.17 and explaining 11.73 of the variance. The factor weight of the items, TE4 (factor weight = .860), TE5 (factor weight = .810), TE3 (factor weight = .730), TE2 (factor weight = .650), and the last one is TE1 (factor weight = .606). The third component was subjective norms; it has 4 factors the weight of each factor described as follows. The first item SNS1 weight = .898, SNS2 factor weight = .887, SNS4 factor weight = .846, and SNS3 factor weight = .820. Moreover, the eigenvalue of this component is 2.226 and explained 8.246 of the variance of the study. The fourth component is an attitude towards the behavior. This variable has four factors that have 1.816 eigenvalue and explained 6.725 of the total variance. Among the items, ATB2 factor weight = .863, ATB1 factor weight = .792, ATB3 factor weight = .791 and the last factor is ATB4 factor weight = .500. The fifth component of the study is tax knowledge; at the very beginning of this variable, the researcher adapted five items. However, one item (TK5) was not significant and removed from this analysis. In this component, the highest value was scored by TK3 (factor weight = .866), the second highest TK2 (factor weight = .801), the third highest factor weight (weight = .700), and the last factor is TK4 (weight = .690). The eigenvalue of this component was 1.413 and explained 5.233% of the variance. The last component is a moral obligation; like tax knowledge, the researcher adapted for this variable 4 items, though, one item (MO4) was not significant and removed from the items list. The eigenvalue of this component was 1.113 and explained 4.123 of the variance. From the items, MO1 scored the highest factor weight of .891, the second highest weight in this component was MO3 with a factor weight of .854, and the third highest factor weight was scored by MO3 with a value of .508.
Association analysis of the study variables
To analyze the correlation between variables as shown in the Table 5 , the relation between subjective norms with taxpayers engaged in tax evasion is r = 0.240 ( p < 0.05); this indicates that there is a statistically significant relationship between the two variables. The relationship between ATB with TE, MO with TE, TK with TE, and TF with TE, the Pearson correlation result is r = 0.318 ( p < 0.05), r = 0.371 ( p < 0.05), .446, and r = 0.691 ( p < 0.05) respectively and statistically significant. It implies that the independent variables have a positive relationship with the dependent variable of the study with a statistically significant level of p < 0.05 and n = 370.
Effect analysis of the study variables
As shown in Table 6 , the study independent variables (SNS, ATB, MO, TK, and TF) explained the study dependent variable (TE) by 54.9%. This result indicates that there are other variables that explain the dependent variable by 45.1% which has not been investigated under this study.
The proposed hypothesis of the study has been tested based on the coefficient of regression and the “ p ” value of the study variables. The detail result is described as follows:
As shown in Table 7 , moral obligation influences positively the taxpayers to engage in tax evasion activities with a beta value of .177 and p < .05. This result entails that the taxpayers are influenced by other stakeholders to engage in tax evasion, and they have low moral value to pay the tax levied by the government. This result is supported by the finding of Alleyne and Harris ( 2017 ), Rantelangi and Majid ( 2018 ), and Sadjiarto et al. ( 2020 ). Thus, the hypothesis related to this variable has been rejected because moral obligation influences positively taxpayers to engage in tax evasion.
H 2 . Tax fairness has a positive influence on taxpayers to engage in tax evasion
To minimize the participation of taxpayers engaged in tax evasion, tax fairness plays a significant role. The regression result indicates in Table 7 that tax fairness positively influences the taxpayers to engage in tax evasion. This result is similar to the finding of Majid et al., ( 2017 ) and contradicts with the finding of Rantelangi and Majid ( 2018 ) and Alkhatib et al. ( 2019 ). Accordingly, the proposed hypothesis has been accepted because the beta value is .563 and the p value is less than .05.
H 3 . Tax knowledge has a negative influence on taxpayers to engage in tax evasion
Table 7 shows that tax knowledge influences the taxpayers positively to engaged in tax evasion. The beta value is .183 and the value is p = 0.00. It is known that when the taxpayers were not well informed about the importance of tax for the country development and the devastating issues of tax evasion, they will be forced to engage in tax evasion. This finding contradicts the finding of Rantelangi and Majid ( 2018 ) and is supported by the finding of AlAdham et al. ( 2016 ). To conclude, the proposed hypothesis rejected because tax knowledge positively influenced the taxpayers to engage in tax evasion.
H 4 . Subjective norms have a positive influence on taxpayers engaged in tax evasion
Table 7 indicates that subjective norms have not been significantly influenced positively by the taxpayers engaged in tax evasion, which means taxpayers were not influenced by others to participate in tax evasion activities. This result is consistent with the finding of Alleyne and Harris ( 2017 ). Thus, the proposed hypothesis is rejected because the variable of subjective norms was not statistically significant with a p value of .099.
H 5 . Tax payers’ attitude towards the behavior has a positive influence on taxpayers to engage in tax evasion
As indicated in Table 7 , attitudes toward the behavior were not significantly influencing the taxpayers to participate in tax evasion with the p value of .985. However, according to the study conducted by Alleyne and Harris ( 2017 ), attitude toward the behavior significantly predicts the intentions of taxpayers to engage in tax evasion. This finding contradicts with this study result. To conclude, the proposed hypothesis has been rejected because the variable is not statistically significantly influencing the taxpayers to engage in tax evasion activities.
According to Table 7 through the examination of coefficients, moral obligation had a positive effect on tax evasion having a coefficient of .197. This means that a 1% change in moral obligation keeping the other things remain constant can result to motivate taxpayers to engage in tax evasion by 19.7% in the same direction. This finding is similar to the result of Alleyne and Harris ( 2017 ), Nangih and Dick ( 2018 ), Rantelangi and Majid ( 2018 ), and Sadjiarto et al. ( 2020 ). Tax knowledge had a positive effect on tax evasion having a coefficient of .174. This indicates that a 1% change in tax knowledge keeping the other things constant can result in a change in taxpayers to engage in tax evasion by 17.4% in the same direction. This finding contradicts the finding of Rantelangi and Majid ( 2018 ) and is similar to the finding of AlAdham et al. ( 2016 ) and Thu ( 2017 ). Tax fairness also had a positive effect on tax evasion having a coefficient of .468. This implies that a 1% change in tax fairness keeping the other things remain constant can result in a change in taxpayers engage in tax evasion by .468% in the same direction. This result is similar to the finding of Majid et al. ( 2017 ) and contradicts the finding of Alkhatib et al. ( 2019 ) and Rantelangi and Majid ( 2018 ). Thus, the final model of the study would be:
Tax evasion = .623 + .197MO + .174TK + .468TF
To generalize, the standardized beta coefficient indicates that tax fairness highly affects taxpayers to engage in tax evasion by 56.3%, tax knowledge affects secondly taxpayers to engage in tax evasion by 18.3%, and moral obligation affects taxpayers to engage in tax evasion by 17.7%. The remaining variables subjective norms and attitude towards the behavior were not statistically significant.
Conclusion and recommendations
Every citizen of the country was subjected to pay the tax of the country levied by the authority that administered the revenue. However, the taxpayer may be reluctant to pay a tax based on their revenue. There are push factors that instigate payers to engage in tax evasion. Sometimes the payers may be convinced themselves that being engaged in tax evasion is ethical, others may consider it unethical. They may argue “I Do Not Receive Benefits, Therefore I Do Not Have to Pay” (Robert, 2012 ). This study tried to examine the factors that influence taxpayers to engage in tax evasion by identifying five factors namely moral obligation , tax fairness , tax knowledge , subjective norms , and taxpayers’ attitude towards the behavior . The study findings based on the result analysis described as follows.
The correlation analysis of the study shows that there was a positive and statistically significant relationship between independent variables with the dependent variable (tax evasion). The regression result, on the other hand, revealed that tax knowledge affects taxpayers to participate in tax evasion activities with a statistically significant level. This finding can be evidence that the knowledge of the taxpayers regarding the importance of tax is limited. Because according to the regression result, they engaged in the tax evasion activities in the study area. The other factor that affects taxpayers to engage in tax evasion is tax fairness. The regression result of tax fairness supported that taxpayers have been affected by the fairness of the tax system in the study area to participate in tax evasion. The finding confirms that the tax charged by the government is not fair for payers. Thus, we can conclude that due to the absence of tax fairness taxpayers are engaged in tax evasion in the city administration. The other variable moral obligation regression result confirms that moral obligation affects positively taxpayers to engage in tax evasion. This is signal that taxpayers did not know the moral value of retaining from tax evasion that is why the moral obligation results in positive and statistical significance. Generally, tax fairness highly affects taxpayers to evade taxes, tax knowledge affects secondly, and moral obligation affected tax payers thirdly to evade tax in the city administration.
Based on the findings, the following recommendations have been forwarded by the researcher. The first one is creating a fair tax payment system, or charging fair tax for the payers helps to reduce the participation of payers in tax evasion. The second recommendation is cascading different training related to tax will help taxpayers to pay a tax based on their annual income. The last recommendation is related to tax moral or moral obligation. The moral is an abounding rule for human beings to know the right and wrong activities. The authority is better to strive to recognize the payers about the moral obligations of the payers and better to inform to the payers to think about the shattering effect of tax evasion for the country development and city as well.
Further future lines of research will attempt to:
Investigate the employees’ side of tax authority and the perception of the community towards tax evasion.
Explore other influencing factors that affect tax payers to engage in tax evasion which are not incorporated under this study.
Conducting a comparative study on one city, region, and country with others.
Suggestion for future study
This study addresses only one city administration in Amhara region; other researchers are better to undertake the study on one more cities.
Availability of data and materials
All data are included in the manuscript and available on hand too.
Attitude towards the behavior
- Moral obligation
Micro and small enterprises
- Tax evasion
- Tax fairness
- Tax knowledge
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Kassa, E.T. Factors influencing taxpayers to engage in tax evasion: evidence from Woldia City administration micro, small, and large enterprise taxpayers. J Innov Entrep 10 , 8 (2021). https://doi.org/10.1186/s13731-020-00142-4
Received : 01 October 2020
Accepted : 09 December 2020
Published : 16 February 2021
DOI : https://doi.org/10.1186/s13731-020-00142-4
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The Economics of Long-Term Care in Canada
This paper contributes a broad overview of the Canadian long-term care system. Taking an economist’s viewpoint, we bring together supply and demand factors to provide an economic analysis of the current and future path for long-term care. Like other OECD countries, the coming demographic wave of older baby boomers will put tremendous stress on the existing financial, organizational, and physical structures of the long-term care system. Unlike other OECD countries, Canada’s system is organized almost entirely at the subnational level, with provinces and territories having by far the largest role in financing and regulating long-term care. We provide institutional and empirical details on the evolution and future of Canada's long-term care system.
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How Democrats Lost Voters With a ‘Compensate Losers’ Strategy
By Peter Coy
A lot of Democrats are bewildered by why their party isn’t doing better in campaigns against a Republican Party that is deeply dysfunctional. A new paper by three economists proposes a fresh explanation that seems persuasive to me. It says the Democrats went astray right around … 1976.
The argument, in a nutshell, is that the Democratic Party has gained educated voters but lost less educated voters because of a change in how it tried to help the working class and the poor. Instead of trying to prevent market forces from generating inequality, it has leaned toward giving free rein to market forces and then fixing the resulting inequalities through the tax-and-transfer system, taking some of the gains of the most successful and sharing them with the least successful.
The working paper , from the National Bureau of Economic Research, is titled “‘Compensate the Losers?’ Economic Policy and Partisan Realignment in the U.S.” Its three authors are Ilyana Kuziemko, a professor at Princeton; Nicolas Longuet Marx, a doctoral candidate at Columbia; and Suresh Naidu, a Columbia professor.
Historically, the Democratic Party was a party of the working class. Democrats inspired by the successes of the New Deal stood for helping working people earn a decent living through measures such as a higher minimum wage, unionization and restrictions on imports of cheap goods that would take jobs away from Americans.
But in the 1970s, New Democrats began to exert more influence over the party. They argued that many traditional Democratic policies were inefficient, creating what economists call deadweight losses. For example, they contended that high minimum wages killed jobs and that tariffs harmed consumers (including low-income ones) by raising prices.
The New Democrats weren’t heartless. They wanted to help the poor and working class. But they wanted to let the free market do what it does best, namely create wealth, and then use government policy to take from the rich and give to the poor. That’s “compensating the losers,” as the paper’s title has it. Their economics-inflected strategy was aimed at recapturing white, middle-class voters who had defected to the Republican Party.
For decades, Democratic primaries pitted traditional Democrats against New Democrats. Hubert Humphrey, Walter Mondale and Jesse Jackson were traditionalists. Gary Hart, Bill and Hillary Clinton and John Kerry were revisionists. Gradually the revisionists gained the upper hand. The Democratic Leadership Council, formed in 1985, was their think tank. Bill Clinton’s victories in 1992 and 1996 were seen as proof of the rightness of their approach.
Something wasn’t working, though. The Democratic Party was picking up college-educated suburban voters, but the working class was abandoning it in droves. The Democratic Party went from being less educated than the Republican Party to more educated.
“In the 1940s, every additional year of education predicts a three-percentage-point decrease in the likelihood of identifying as a Democrat,” Kuziemko, Marx and Naidu wrote. “This relationship holds with little change until an inflection point, which we estimate as occurring in 1976. Since then, the pace of realignment remains relatively steady.”
Party leaders consoled themselves that at least they had managed to hang on to Black and Hispanic voters, but lately Hispanic voters, too, have begun drifting toward the G.O.P.
To understand the party realignment, the three economists analyzed results of more than 800 surveys of about two million respondents since the 1940s. They also studied congressional voting records, party platforms and data on donations. They found that at least since the 1940s, “less educated voters appear to prefer a less market-based and more interventionist economic program that aims to promote domestic employment and wages.” Those voters left the Democratic Party when the party left them.
The authors labeled the traditional, New Deal approach as “predistributionist” and the New Democrat approach as “redistributionist.” The authors didn’t have data on why less educated voters prefer predistributionist policies. One explanation could be the dignity of work: People want to feel that they earned their own way (even if their earnings were invisibly bolstered by government policies such as tariffs). Or “voters may believe that the tax-and-transfer system is more opaque, corrupt or inefficient,” they wrote.
The traditional knock on a “compensate the losers” strategy is that the promises of compensation are often unfulfilled. For example, people who lose their jobs because of cheap imports don’t get the retraining they need to start new careers. When I emailed Kuziemko and Naidu about that, Naidu wrote back, in part: “Our paper is more about the political efficacy of the ‘compensate the losers’ view than whether or not it’s actually economically efficient. It might be that less educated voters don’t trust that it will happen, or it could be that even if it did happen, it wouldn’t preserve what people like about their current job.” He added, “We can’t disentangle those things.”
In reality, every government does some predistribution and some redistribution. It’s just that the Democratic Party has tipped more toward redistribution in recent decades. Whether that is good or bad from an economic perspective is not something the paper addresses.
From a political perspective, the tilt toward the preferences of the more educated might have won the Democrats a firmer majority of the electorate if the rate of college completion had continued to grow as vigorously as it did in the 1970s and 1980s, but it did not, Kuziemko told me in a phone interview with her and Naidu.
An alternative theory you sometimes hear is that the culture wars caused the party realignment. But that doesn’t match the evidence, the authors wrote. College-educated voters tend to be socially liberal, whereas Bill Clinton and other New Democrats were actually less socially liberal than old-fashioned Democrats such as McGovern. The fact that educated voters chose New Democrats anyway is evidence that economic factors were so important to them that they outweighed social ones, the authors wrote.
President Biden doesn’t fit the paper’s thesis. He is a throwback to the New Deal era of the Democratic Party. He has more in common with Humphrey than with Clinton or Barack Obama, whom he served as vice president. When he supported the United Auto Workers in its strike against General Motors, Ford and Stellantis, he became the first sitting president to walk a picket line.
Kuziemko and Naidu told me that their research didn’t extend to the Biden presidency but that Biden’s unrelenting emphasis on creating good, well-paying jobs is consistent with trying to win back less educated voters.
I ran the paper’s thesis past some people at a conference of progressive Democrats, Bold New Consensus, that was held in New York on Thursday at Cooper Union. Felicia Wong, the president of the Roosevelt Institute, said Biden is on the right track in emphasizing predistributionist policies, although she said there will always be a need for redistribution as well. Dorian Warren, who is a co-president of the progressive organizing group Community Change and co-chair of the Economic Security Project, said predistributionist and redistributionist policies can reinforce one another, to workers’ benefit.
I wouldn’t say that pre- versus re- is the entire explanation for what has happened in party politics over the past half-century, and I don’t think the authors would, either. At the conference of progressives in New York, the author Anand Giridharadas said, “We need to throw a more fun party than the other side,” calling Democrats “tedious, moralistic, scolding and wonky.” That sounds about right. My colleague Pamela Paul just interviewed John B. Judis and Ruy Teixeira, whose new book “Where Have All the Democrats Gone?” pins the blame for Democrats’ losses on a mix of economic and social policies.
That said, I do think that Kuziemko, Marx and Naidu have put their collective finger on a genuinely important factor in the Democrats’ loss of an important constituency. Assuming their analysis holds up to peer review — and I don’t know why it wouldn’t — this research is likely to be cited by economists and political scientists for years.
Outlook: Andrew Hunter
Judging from the weakness in recent economic data, “it is increasingly hard to imagine” that the Federal Reserve will increase interest rates any more, Andrew Hunter, the deputy chief U.S. economist of Capital Economics, wrote in a note to clients on Friday. He pointed to the slowdown of payroll and wage growth and a decline in the number of people reported as employed in the October jobs report . “Overall, we suspect the softening in labor market conditions has much further to run and still expect the Fed to be cutting interest rates again in the first half of next year,” he wrote.
Quote of the Day
“Remember what I always say: People first, then money, then things.”
— Suze Orman (frequently)
Peter Coy has covered business for more than 40 years. Email him at coy-n[email protected] or follow him on Twitter. @ petercoy
The UK White Paper on International Development – Has it delivered on its ambitions?
The process for producing the UK White Paper on International Development – the first since 2009 – was launched in the summer with much fanfare.
We were promised a cross-government White Paper presenting “an approach to international development fit for the 21st century”. So, now the White Paper has been published, how does Bond judge its ambitions, and has it delivered on its promises?
What positives can we take away from the White Paper?
This White Paper represents a much-needed statement of the UK’s growing ambitions in promoting sustainable development, at a time when conflict is growing, extreme poverty is in reverse, climate change is accelerating, and the Sustainable Development Goals (SDGs) are significantly off-track.
There is a clear commitment in the White Paper to refocus UK aid on lower income countries, to scale up efforts to achieve the SDGs, to promote open societies, reform international institutions and to further prioritise the needs of women and girls, people living with disabilities and other marginalised groups. These actions will help to make the UK aid budget go further in contributing to the global goals.
We warmly welcome the White Paper commitment to pursue more respectful and equitable development partnerships, to move away from an outdated donor-recipient model, to “acknowledge our past” and to publish a strategy setting out how the UK will support local leadership on development. We and our members urge the Foreign, Commonwealth and Development Office (FCDO) to put this rhetoric into practice and ensure this strategy shifts decision-making, resources and power to local partners and communities. We look forward to a close collaboration with the department to take the strategy forward.
There are also range of welcome commitments on civil society, including to reinvigorate the FCDO’s approach to partnering with civil society through a range of new funding mechanisms, and to bring forward legislation to introduce a humanitarian ‘exception’ to the UK’s financial sanctions.
In addition, valuable commitments are made in the White Paper to tackle corruption and illicit finance, to help secure an ambitious new climate finance goal in 2024, to scale up climate adaptation spending, to strengthen pandemic preparedness and promote universal access to health, education and social protection services, although there is precious little on water and sanitation.
The financing ‘elephant in the room’
With these and many other commitments in the White Paper, there is a nagging question of how they will be resourced when the UK aid budget remains at 0.5% of national income, with a third of this currently being used to support refugees in the UK. Universal access to basic services, for example, requires significant upfront investments now, and the government is not planning to return spending to 0.7% until close to the 2030 – the apparent end date for this White Paper, as well as the SDGs.
Much has been made in the media coverage of the White Paper of a new commitment for British International Investment (BII) to make half of its investments in poorer and more fragile countries. Our analysis is that these countries received two-thirds of BII’s country-specific investments in 2022 and an average of 44% of BII investments during 2018-22. This commitment may therefore only have a marginal impact on directing BII’s resources to where they are needed the most.
Limited ambition on ‘beyond aid’ reforms
There will also be a sense of disappointment across the sector on the limited ambition this White Paper presents on UK reform commitments to tax, debt, trade and the systems that govern global cooperation in these areas. Whilst there are some important commitments, like on promoting Climate Resilient Debt Clauses and imports from developing countries, there are some glaring gaps.
On tax, there is little recognition of the UK’s role in driving damaging corporate tax dodging through UK-linked tax havens, and a reaffirmation of the role of the OECD in governing global tax policy, rather than promoting a role for a UN convention and representative tax body, as proposed by the G77 and civil society.
On debt, its fails to offer a bold vision for resolving the debt crisis and to offer a response to the growing role private creditors are playing in driving debt levels. NGOs have been calling for the government to introduce legislation to incentivise private lenders to take part in debt relief processes, an option the government did not adopt.
On trade, there is no recognition of the need to reform the World Trade Organization and the government did not address our call for it to publish a trade strategy that commits the UK to put trade at the service of reducing poverty, tackling climate change, and promoting decent work.
It is hard not to conclude that the lack of ambitious policy in these areas suggests that key departments outside of FCDO did not take this White Paper seriously enough. This is a major concern, given the SDGs cannot be achieved without a whole of government response.
Progress, but more ambition is needed
Overall, this White Paper continues the recent progress we have seen in the UK’s international development ambitions being rebuilt after period of decline. It also feels like this is the best White Paper that could be produced within the constraints of the government’s current political ambitions on international development.
Our members hope that with the appointment of David Cameron – who had a strong record of supporting international development whilst Prime Minister – as Foreign Secretary, political ambitions on international development can shift further and that this White Paper can represent a base level from which more ambitious progress can be achieved
The Foreign Influence Registration Scheme is coming – here’s what you need to know
Draft guidance on the Foreign Influence Registration Scheme has been published, and while the scheme is less onerous than initial proposals, the guidance lacks much needed clarity. We need your help to change this.
What we hope to see from new Foreign Secretary David Cameron
Following his surprise appointment, Bond’s Director of Policy, Advocacy and Research, Gideon Rabinowitz, looks at the in-tray for new Foreign Secretary, David Cameron, and highlights four issues he should concentrate on in his first months in office.
No room to operate: Why is children’s surgery missing from the global health agenda?
The dire consequences of untreated surgical conditions among children are alarming. Surgical care must become a top priority in global health discussions. The urgency to act is clear. And the time to act is now. New blog from Garreth Wood of Kids Operating Room.
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World behind on almost every policy required to cut carbon emissions, research finds
Coal must be phased out seven times faster and deforestation reduced four times faster to avoid worst impacts of climate breakdown, says report
Coal must be phased out seven times faster than is now happening, deforestation must be reduced four times faster, and public transport around the world built out six times faster than at present, if the world is to avoid the worst impacts of climate breakdown, new research has found.
Countries are falling behind on almost every policy required to cut greenhouse gas emissions, despite progress on renewable energy and the uptake of electric vehicles.
This failure makes the prospect of holding global temperatures to 1.5C above preindustrial levels even more remote, according to the State of Climate Action 2023 report . The authors advise that world needs to:
Retire about 240 average-sized coal-fired power plants a year, every year between now and 2030.
Construct the equivalent of three New Yorks’ worth of public transport systems in cities around the world each year this decade.
Halt deforestation, which is happening to an area the size of 15 football pitches every minute, this decade.
Increase the rate of growth of solar and wind power from its current high of 14% a year to 24% a year.
Cut meat consumption from ruminants such as cows and sheep to about two servings a week in the US, Europe and other high-consuming countries by 2030.
The prospect of staying within 1.5C will slip away altogether without drastic action, the authors warned. Sophie Boehm, research associate at the World Resources Institute and lead author of the report, said: “Global efforts to limit warming to 1.5C are lacklustre at best. Despite decades of dire warnings and wake-up calls, our leaders have largely failed to mobilise climate action anywhere near the pace and scale needed. Such delays leave us with very few routes to secure a livable future for all.”
She added: “There’s no time left to tinker at the edges. Instead, we need immediate, transformational changes across every single sector this decade.”
Public funding of fossil fuels continues, despite countries’ commitments made two years ago in Glasgow at Cop26 , to limit global heating to 1.5C above preindustrial levels. Many countries are also still expanding their fossil fuel production: for instance, in the UK, the government last week announced new annual licensing rounds for exploration projects in the North Sea .
Countries including the UK are also increasing subsidies and tax breaks for fossil fuels. After Russia’s invasion of Ukraine in early 2022, government financing for fossil fuels increased sharply: subsidies almost doubled from 2020 rates, to reach the highest levels seen in nearly a decade, according to the report.
The State of Climate Action 2023 report, published on Tuesday and compiled by six climate thinktanks, examined all aspects of climate policy from governments across the world. Although other recent studies have found a rapid acceleration of the uptake of green technology around the world, including the expansion of renewable energy, the report found few bright spots.
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Sales of electric vehicles are booming, having more than tripled since 2020. But that is the only measure of the 42 indicators studied that was found to be progressing at the rate needed to cut emissions by nearly half this decade compared with 1990 levels, which is required to give the world a chance of staying within the 1.5C limit .
According to the International Energy Agency, if all countries were to fulfil the pledges they have made to reduce carbon, global heating would reach about 1.7C above preindustrial temperatures. But this relies on countries implementing policies rather than simply stating goals, and the State of Climate Action report shows that countries have so far failed to come forward with the policy measures necessary to meet their goals, and to implement fully policies that they do have.
Razan Al Mubarak, the UN high level champion on climate change, and part of the United Arab Emirates team that will host the Cop28 summit in Dubai later this month , called on all countries to re-examine their policies. “World leaders must recognise the insufficient progress to date and chart a path forward that builds on the successes we are seeing. This moment should serve as a springboard for accelerated actions,” she said.
- Climate crisis
- Greenhouse gas emissions
- Fossil fuels
- Renewable energy
- Electric, hybrid and low-emission cars
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