Tax Evasion in a Transition from Socialism to Capitalism: The Psychology of the Social Contract
AbstractIn a common assumption of the economics of tax evasion, extending beyond the basic Allingham-Sandmo model, the choice of a taxpayer to evade taxes depends upon the perceived fairness of the tax system. The purpose of the paper is to provide a psychological foundation for this assumption by drawing on Hayek’s theory of human behavior as a process of rule following. According to the main hypothesis, taxpayers are more compliant with tax laws to which they can in principle give their full consent. A social contract as a basis of tax policy may provide a potent means to combat tax evasion particularly in transition economies that have inherited a deep mistrust of the government from their socialist past.
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Bibliographic InfoPaper provided by Bank of Finland, Institute for Economies in Transition in its series BOFIT Discussion Papers with number 6/2000.
Length: 39 pages
Date of creation: 06 Jul 2000
Date of revision:
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tax evasion; social contract; economics of psychology; transition economies; Austrian economics;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-09-16 (All new papers)
- NEP-HPE-2007-09-16 (History & Philosophy of Economics)
- NEP-PBE-2007-09-16 (Public Economics)
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