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Tax compliance under tax regime changes

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  • Heinemann, Friedrich
  • Kocher, Martin G.

Abstract

In this paper we focus on the compliance effects of tax regime changes. According to the economic model of tax evasion, a tax reform should affect compliance through its impact on tax rates and incentives. Our findings demonstrate the importance of at least two further effects not covered by the traditional model: First, reform losers tend to evade more taxes after the reform. Second, a reform from a proportionate to a progressive system decreases compliance compared to a switch in the reverse direction. However, the level of compliance is generally higher under a progressive than under a proportionate regime.

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Bibliographic Info

Paper provided by University of Munich, Department of Economics in its series Discussion Papers in Economics with number 11443.

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Date of creation: Mar 2010
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Handle: RePEc:lmu:muenec:11443

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Keywords: tax reforms; tax compliance; experiment;

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Citations

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Cited by:
  1. Pickhardt, Michael & Prinz, Aloys, 2014. "Behavioral dynamics of tax evasion – A survey," Journal of Economic Psychology, Elsevier, vol. 40(C), pages 1-19.
  2. 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).

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