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Fair tax evasion

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Abstract

In this paper we analyse how fairness considerations, in particular considerations of just income distribution, affect whether or not people find tax evasion justifiable and their willingness to evade taxes. Using data from the Norwegian “Hidden Labour Market Survey” we show that individuals with low hourly wages and long working hours have a higher probability of justifying tax evasion. These are individuals that arguably are treated unfairly in a tax system that taxes an individual’s total income without taking into account how many hours the individual has worked. The same individuals are also more willing and likely to take home income without reporting it to the tax authorities. The results are consistent with a model in which individuals make a trade-off between economic gains and fairness considerations when they make decisions about tax evasion. Taken together our results suggest that considerations of fair income distribution are important for the analysis of tax evasion.

Suggested Citation

  • Barth, Erling & Cappelen, Alexander W. & Ognedal, Tone, 2013. "Fair tax evasion," Discussion Paper Series in Economics 11/2013, Norwegian School of Economics, Department of Economics.
    • Handle: RePEc:hhs:nhheco:2013_011
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    File URL: http://www.nhh.no/Files/Filer/institutter/sam/Discussion%20papers/2013/11.pdf
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    • Barth, Erling & Cappelen, Alexander W. & Ognedal, Tone, 2006. "Fair Tax Evasion," Memorandum 07/2006, Oslo University, Department of Economics.

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    Cited by:

    1. Ognedal, Tone, 2014. "Morale in the Market," Memorandum 04/2014, Oslo University, Department of Economics.
    2. Cãƒtãƒlina Cozmei, 2012. "Playing The Fiscal Lottery Game," Proceedings of the INTERNATIONAL MANAGEMENT CONFERENCE, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 6(1), pages 511-521, November.
    3. Daniel Jeong-Dae Lee, 2019. "Cheating the government: does taxpayer perception matter?," Asia-Pacific Sustainable Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 26(2), pages 1-23, December.
    4. Gabriela S. Pantoja & Rodrigo S. Penaloza, 2014. "Tax evasion under behavioral structures," Economia, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics], vol. 15(1), pages 30-40.
    5. Dezső, Linda & Alm, James & Kirchler, Erich, 2022. "Inequitable wages and tax evasion," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 96(C).
    6. Nikolaos Varotsis & Ioannis Katerelos, 2020. "Tax behaviour relating to the review of a revised regional tax policy: a study in Greece," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 9(1), pages 1-16, December.
    7. Grundmann, Susanna, 2020. "Do just deserts and competition shape patterns of cheating?," Passauer Diskussionspapiere, Volkswirtschaftliche Reihe V-79-20, University of Passau, Faculty of Business and Economics.
    8. Weinreich, Daniel, 2013. "Fair tax evasion and majority voting over redistributive taxation," MPRA Paper 48919, University Library of Munich, Germany.

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    More about this item

    Keywords

    Tax evasion; redistributive taxation; fair income distribution.;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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