Endogeneity in the Institutions Governing Public Disclosure of Tax Compliance Information

Abstract: This paper seeks to probe into the optimal degree (or level) of public disclosure regarding 'tax compliance information (TCI),' an area not yet fully explored in existing literature. Starting from the recognition that the issue can be portrayed as an 'allocation of the competing rights' regarding a property among various parties involved, we heuristically examine the legal institution corresponding to such an optimal allocation that minimizes the relevant total social cost. In particular, from a perspective of new institutional economics, we highlight the endogeneity embedded in determining the degree of public disclosure by associated law enforcers; it tends to lower the actual disclosure degree.