Project Grant 2149432

This Project Grant from the National Science Foundation Division of Social and Economic Science, under the Social, Behavioral, and Economic Sciences federal grant program (CFDA 47.075), provides $362,577 to Columbia University for research on attacking networks of tax evasion. The research will combine new economic theory and innovative methodologies to provide insights into tax evasion by firms and the strength of enforcement spillovers through production networks. In partnership with tax authorities, the project will perform two randomized controlled trials to test interventions focused on electronic invoicing and desk audits of discrepancies between trading partners' tax reports. The first experiment aims to measure the direct and indirect effects of these interventions on targeted firms and their business partners. Results will be used to calibrate an economic model of optimal tax enforcement targeting. A second experiment will test the model's targeting rule against status quo and random approaches. Findings seek to inform policies to improve the fairness and efficiency of US tax administration, reduce deficits, and optimize resource allocation, with lessons applicable to other countries as well.