Behavioral dynamics of tax compliance under an information services initiative
AbstractTax authorities utilize the audit process, imposing penalties on tax evaders, as their primary means of enforcement. In recent years, a “service” paradigm, whereby tax authorities provide information about correct tax reporting to taxpayers, has shown the potential to further “encourage” correct tax reporting. This research utilizes laboratory experiments to investigate the behavioral dynamics pertaining to information acquisition and tax evasion. The results show that the overall effect of a helpful information service is to decrease tax evasion. Further, an audit has the behavioral effect of lowering information acquisition rates and increasing evasion immediately after experiencing a penalty. This effect persists (although diminishes) in subsequent tax reporting decisions.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 38865.
Date of creation: 23 Dec 2011
Date of revision:
Tax evasion; Tax compliance; Behavioral Dynamics; Behavioral economics; Experimental economics;
Find related papers by JEL classification:
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
This paper has been announced in the following NEP Reports:
- NEP-ACC-2012-05-29 (Accounting & Auditing)
- NEP-ALL-2012-05-29 (All new papers)
- NEP-EVO-2012-05-29 (Evolutionary Economics)
- NEP-EXP-2012-05-29 (Experimental Economics)
- NEP-IUE-2012-05-29 (Informal & Underground Economics)
- NEP-PBE-2012-05-29 (Public Economics)
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