Celebrities, the News Media, and Participation in Tax Amnesties
Cautionary Tales: Celebrities, the News Media, and Participation in Tax Amnesties Marcel Garz Verena Pagels Hamburg Media School and University of Hamburg August 2018 We thank Ruben Durante, Eva Eberhartinger, Hannes Fauser, Evelina Gavrilova-Zoutman, Katharina Kleinen-von Königslöw, Brian Knight, Ilyana Kuziemko, Gregory Martin, Riccardo Puglisi, Armin Rott, Francesco Sobbrio, Jil Sörensen, Michael Stimmelmayr, David Strömberg, Brigitte Unger, and participants at the 2nd Economics of Media Bias Workshop in Lausanne, the Conference on Fair and Sustainable Taxation in Brno, the 2017 Spring Meeting of Young Econo- mists in Halle (Saale), the German Law and Economics Association in Marburg, and the 10th CESifo Norwegian-German Seminar on Public Economics in Munich for helpful comments and suggestions. Declarations of interest: none. Corresponding author: Marcel Garz, Hamburg Media School, Finkenau 35, 22081 Hamburg, Germany. Email: m.garz (at) hamburgmediaschool.com. 1 Abstract This study investigates whether press coverage on celebrities with tax issues affects the behavior of other tax payers. We compile an original data set for Germany, including regional information on the amount of tax payers using amnesty regulations to voluntarily disclose taxes they have evaded. The data set also includes counts of news reports published by 6 national and 54 local newspapers that address celebrity tax evaders who were publicly tried between January 2010 and June 2016. We find a strong correlation between the amount of self-denunciations and the news coverage. To identify the causal effect, we use exogenous variation in the reporting, resulting from disasters and terrorist attacks that coincide with the celebrity trials. Instrumental variable estimates suggest that an increase in news coverage by the amount of an average trial raises participation in the tax amnesty program by approximately 22.5%.
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