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Does Tax-Collection Invariance Hold? Evasion and the pass-Through of State Diesel Taxes

May 2016

Wojciech Kopczuk, Justin Marion, Erich Muehlegger, Joel Slemrod


One of the key elements of this article is the discussion around pass-Through in the Presence of Tax Evasion, Institutional Details, and Data and Methodology. The hypothesis that this article is testing is the claim that the identity of the party has a correlation with the incidence of a tax. The article also asserts that tax revenues increase when taxing wholesalers rather than retailers which suggests evasion is an explanation for the result and evasion is the likely explanation for remitting parties tax variation.

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Policy Implications

The policy implications of evading a tax is low revenue for the state; to implement and fund policies like highway road repairs, healthcare, education, and welfare programs. The state also funds the law enforcement and fire department, so tax evasion may affect various public programs. The prior empirical work in this article examines evasion and enforcement of diesel taxes. This affects truck drivers who depend on their income and who pay an additional diesel gas tax on top of any truck repairs while driving on roads that damage the vehicle.

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