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Taxpayer information assistance services and tax compliance behavior

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Author Info

  • Alm, James
  • Cherry, Todd
  • Jones, Michael
  • McKee, Michael

Abstract

The traditional "enforcement" paradigm of tax administration views taxpayers as potential criminals, and emphasizes the repression of illegal behavior through frequent audits and stiff penalties. However, an important trend in tax administration policies in recent years is the recognition that this paradigm is incomplete. Instead, a revised "service" paradigm recognizes the role of enforcement, but also emphasizes the role of tax administration as a facilitator and a provider of services to taxpayer-citizens. This research utilizes laboratory experiments to test the effectiveness of such taxpayer service programs in enhancing tax compliance. Our basic experimental setting mimics the naturally occurring environment: subjects earn income, they must choose whether to file a tax return, and they then must choose how much of their net income to report to a tax authority that may audit the subject. To investigate the effects of taxpayer services, we "complicate" these compliance decisions of subjects, and then provide "services" from the "tax administration" that allow subjects to compute more easily their tax liabilities. Our results indicate that uncertainty reduces both the filing and the reporting compliance of an individual. However, we also find that agency-provided information has a positive and significant impact on the tendency of an individual to file a tax return, and also on reporting for individuals who choose to file a return.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Psychology.

Volume (Year): 31 (2010)
Issue (Month): 4 (August)
Pages: 577-586

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Handle: RePEc:eee:joepsy:v:31:y:2010:i:4:p:577-586

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Web page: http://www.elsevier.com/locate/joep

Related research

Keywords: Tax evasion Tax compliance Behavioral economics Experimental economics;

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References

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  1. James Alm & Benno Torgler, 2012. "Do Ethics Matter? Tax Compliance and Morality," Working Papers 1207, Tulane University, Department of Economics.
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  4. Cummings, Ronald G. & Martinez-Vazquez, Jorge & McKee, Michael & Torgler, Benno, 2009. "Tax morale affects tax compliance: Evidence from surveys and an artefactual field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 70(3), pages 447-457, June.
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Citations

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Cited by:
  1. James Alm, 2012. "Measuring, Explaining, and Controlling Tax Evasion: Lessons from Theory, Experiments, and Field Studies," Working Papers 1213, Tulane University, Department of Economics.
  2. James Alm & Kim M. Bloomquist & Michael McKee, 2013. "When You Know Your Neighbor Pays Taxes: Information, Peer Effects, and Tax Compliance," Working Papers 13-22, Department of Economics, Appalachian State University.
  3. Pickhardt, Michael & Prinz, Aloys, 2014. "Behavioral dynamics of tax evasion – A survey," Journal of Economic Psychology, Elsevier, vol. 40(C), pages 1-19.
  4. Kai A. Konrad & Tim Lohse & Salmai Qari, 2011. "Customs Compliance and the Power of Imagination," Working Papers customs_compliance_and_th, Max Planck Institute for Tax Law and Public Finance.
  5. Sebastian Eichfelder & Chantal Kegels, 2012. "Compliance costs caused by agency action? Empirical evidence and implications for tax compliance," Schumpeter Discussion Papers sdp12005, Universitätsbibliothek Wuppertal, University Library.
  6. Doerrenberg, Philipp & Duncan, Denvil, 2014. "Tax Incidence in the Presence of Tax Evasion," IZA Discussion Papers 8137, Institute for the Study of Labor (IZA).
  7. Doerrenberg, Philipp & Duncan, Denvil, 2013. "Experimental Evidence on the Relationship between Tax Evasion Opportunities and Labor Supply," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 80041, Verein für Socialpolitik / German Economic Association.
  8. James, Simon & Edwards, Alison, 2010. "An annotated bibliography of tax compliance and tax compliance costs," MPRA Paper 26106, University Library of Munich, Germany.
  9. James Alm & Jeremy Clark & Kara Leibel, 2011. "Socio-economic Diversity, Social Capital, and Tax Filing Compliance in the United States," Working Papers in Economics 11/35, University of Canterbury, Department of Economics and Finance.
  10. Djanali, Iwan & Sheehan-Connor, Damien, 2012. "Tax affinity hypothesis: Do we really hate paying taxes?," Journal of Economic Psychology, Elsevier, vol. 33(4), pages 758-775.
  11. Djawadi, Behnud Mir & Fahr, René, 2013. "The Impact of Tax Knowledge and Budget Spending Influence on Tax Compliance," IZA Discussion Papers 7255, Institute for the Study of Labor (IZA).
  12. Eichfelder, Sebastian & Kegels, Chantal, 2014. "Compliance costs caused by agency action? Empirical evidence and implications for tax compliance," Journal of Economic Psychology, Elsevier, vol. 40(C), pages 200-219.
  13. Stefura Gabriela, 2012. "The Role of Opportunity, Taxpayers’ Perceptions and Demographic Differences in Tax Compliance Analysis," Annals - Economic and Administrative Series -, Faculty of Business and Administration, University of Bucharest, vol. 6(1), pages 163-177, December.
  14. European Commission, 2013. "Tax reforms in EU Member States - Tax policy challenges for economic growth and fiscal sustainability – 2013 Report," Taxation Papers 38, Directorate General Taxation and Customs Union, European Commission.

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