Attitudes, Incentives and Tax Compliance
AbstractOur study examines whether combining experimental economics and economics psychology techniques can provide a better understanding of individuals’ tax compliance decisions in the laboratory. We find that considering individuals’ attitudinal, personality and intention measures in addition to economic based variables provides a richer understanding of individuals’ actual tax compliance decisions in the laboratory in the face of monetary incentives. We also find that hypothetical and actual compliance decisions in the laboratory are significantly different from each other. Specifically, we find that actual (hypothetical) compliance decisions are significantly influenced by their moral reasoning (anti-establishment) views. Finally, we find that individuals’ actual compliance decisions in the laboratory correlate more significantly with their admission of prior evasion than either their hypothetical compliance decisions or their responses to case scenarios. The latter result, coupled with the lack of appropriate field data on tax compliance, indicates that actual compliance decisions in the laboratory in the face of monetary incentives and with the use of tax terms in the instructions may be an ideal method of obtaining data on individuals’ tax compliance.
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Bibliographic InfoPaper provided by McMaster University in its series Department of Economics Working Papers with number 2004-08.
Length: 40 pages
Date of creation: Aug 2004
Date of revision:
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Other versions of this item:
- V. Umashanker Trivedi & Mohamed Shehata & Stuart Mestelman, 2004. "Attitudes, Incentives, and Tax Compliance," McMaster Experimental Economics Laboratory Publications 2004-04, McMaster University.
- H27 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other Sources of Revenue
This paper has been announced in the following NEP Reports:
- NEP-ACC-2004-10-21 (Accounting & Auditing)
- NEP-ALL-2004-10-21 (All new papers)
- NEP-EXP-2004-10-21 (Experimental Economics)
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