The Determinants of Income Tax Compliance: Evidence from a Controlled Experiment in Minnesota
AbstractThis paper reports on the results of a controlled experiment in Minnesota in which a random sample of taxpayers was informed that their income tax returns would certainly be closely examined. We analyze reported income of this sample of taxpayers, reported income on their previous year's returns, and reported income from the two corresponding years' returns of a control group of taxpayers that did not receive the letter. We find that the treatment effect varies depending on the level of income. Low and middle income taxpayers increased reported income and tax liability relative to the control group, which we interpret as indicating the presence of noncompliance. The effect was much stronger for those with more opportunity' to evade, as measured by their source of income. However, the reported income of the high-income treatment group fell sharply relative to the control group. We suggest a model based on tax audits as a negotiation that can explain this apparently perverse result.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6575.
Date of creation: May 1998
Date of revision:
Publication status: published as Blumenthal, Marsha, Charles Christian and Joel Slemrod. "Do Normative Appeals Affect Tax Compliance? Evidence From A Controlled Experiment In Minnesota," National Tax Journal, 2001, v54(1,Mar), 125-136.
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Find related papers by JEL classification:
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
This paper has been announced in the following NEP Reports:
- NEP-PUB-1998-06-03 (Public Finance)
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