Taking State-Capacity Research to the Field: Insights from Collaborations with Tax Authorities

Out­line

No mod­ern state can ex­ist in the long term with­out ef­fec­tive tax­a­tion. Re­cent re­search emerg­ing from close col­lab­o­ra­tion of aca­d­e­mics with tax au­thor­i­ties has shed new light on how states can build such tax ca­pac­i­ty. Us­ing both ran­dom­ized and nat­ur­al ex­per­i­ments, these part­ner­ships have not only opened ac­cess to new types of data, but have also stim­u­lat­ed new per­spec­tives and re­search ques­tions. While much of re­search in pub­lic fi­nance had his­tor­i­cal­ly as­sumed that a tax in the law is a tax that is col­lect­ed, ex­cit­ing new re­search takes an em­pir­i­cal look in­side the black box of tax ad­min­is­tra­tion. It ad­dress­es is­sues rang­ing from the role of in­for­ma­tion and dig­i­tal­iza­tion, to tax­pay­er be­hav­ior or the link be­tween tax­a­tion and cit­i­zens’ re­la­tion­ship to the state. This pa­per pro­vides a brief overview of some of this re­search, as well as prac­ti­cal ad­vice for those in­ter­est­ed in im­ple­ment­ing re­search in part­ner­ship with tax au­thor­i­ties or oth­er large pub­lic en­ti­ties.

In a fruit­ful it­er­a­tive cy­cle, this strand of the lit­er­a­ture both tests ex­ist­ing the­o­ries and pro­vides em­pir­i­cal puz­zles that can gen­er­ate new the­o­ret­i­cal hy­pothe­ses. The wide range of ge­o­graph­i­cal, eco­nom­ic and cul­tur­al con­texts in which these re­search projects are un­der­tak­en, al­lows to build an in­creas­ing­ly rich pic­ture of the mech­a­nisms at play. Both the­o­ry and repli­ca­tions help gain­ing a deep­er un­der­stand­ing about which ef­fects are very con­text-spe­cif­ic, and which mech­a­nisms seem to be ro­bust across many set­tings.

As this strand of the lit­er­a­ture grows, many ad­di­tion­al re­search top­ics re­main to be ex­plored, in­clud­ing in ar­eas such as the im­pact of tax en­force­ment on real eco­nom­ic ac­tiv­i­ty, the role of so­cial norms, the dis­tri­b­u­tion­al im­pli­ca­tions of tax poli­cies and tax en­force­ment, the role of dis­crim­i­na­tion in tax ad­min­is­tra­tion or the in­ter­play of pol­i­tics and pow­er with tax­a­tion.

Re­search Team

Author

Dina Pomeranz

Assistant Professor of Microeconomics, endowed by the UBS Center

Zurich ZCED

Se­bastián Bus­tos

Post-Doc

Cen­ter for In­ter­na­tion­al De­vel­op­ment, Har­vard Uni­ver­si­ty

Jose Vila-Bel­da Mon­talt

Re­search Man­ag­er

Zurich ZCED