Citizenship and Power in an Agent-based Model of Tax Compliance with Public Expenditure
AbstractIn this paper we present a model of tax compliance with heterogeneous agents who maximize their individual utility based on income and the conjectured level of per capita public expenditure. We formally include psychological drivers in this model. These drivers affect individual behavior, such as risk aversion, together with appreciation of public expenditure, expectations about peers’ compliance and a natural inclination to comply, all of which we summarize in a quality termed “citizenship”. The enforcement system, based on random inspections, is standard and only partially known to agents. The agent-based model is simulated under a variety of settings, representing different “societies”. We use the artificial data produced by the model to estimate the effects of taxpayers’ traits on personal tax behavior and to build a compliance societal slippery slope. At the individual level, we find a positive dependence of compliance on all variables, with the significant exception of the tax rate, which has a negative impact. As far as societies are concerned, we show how aggregate tax compliance depends on composite indices of citizenship and power, and we find that the former is more important than the latter.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Department of Economics, University of Venice "Ca' Foscari" in its series Working Papers with number 2012_24.
Date of creation: 2012
Date of revision: 2012
Contact details of provider:
Postal: Cannaregio, S. Giobbe no 873 , 30121 Venezia
Web page: http://www.unive.it/dip.economia
More information through EDIRC
Tax evasion; public expenditure; agent-based models;
Find related papers by JEL classification:
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
- H40 - Public Economics - - Publicly Provided Goods - - - General
- C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-11-17 (All new papers)
- NEP-CMP-2012-11-17 (Computational Economics)
- NEP-IUE-2012-11-17 (Informal & Underground Economics)
- NEP-PBE-2012-11-17 (Public Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Michele Bernasconi & Alberto Zanardi, 2004. "Tax Evasion, Tax Rates, and Reference Dependence," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 60(3), pages 422-, September.
- James Alm & Benno Torgler, 2004.
"Culture Differences and Tax Morale in the United States and in Europe,"
CREMA Working Paper Series
2004-14, Center for Research in Economics, Management and the Arts (CREMA).
- Alm, James & Torgler, Benno, 2006. "Culture differences and tax morale in the United States and in Europe," Journal of Economic Psychology, Elsevier, vol. 27(2), pages 224-246, April.
- Sandmo, Agnar, 2005. "The Theory of Tax Evasion: A Retrospective View," National Tax Journal, National Tax Association, vol. 58(4), pages 643-63, December .
- Bernasconi, Michele, 1998. "Tax evasion and orders of risk aversion," Journal of Public Economics, Elsevier, vol. 67(1), pages 123-134, January.
- Michael Pickhardt & Goetz Seibold, .
"Income Tax Evasion Dynamics: Evidence from an Agent-based Econophysics Model,"
201179, Institute of Spatial and Housing Economics, Munster Universitary.
- Michael Pickhardt & Goetz Seibold, 2011. "Income Tax Evasion Dynamics: Evidence from an Agent-based Econophysics Model," Papers 1112.0233, arXiv.org.
- Pickhardt, Michael & Seibold, Goetz, 2011. "Income tax evasion dynamics: Evidence from an agent-based econophysics model," CAWM Discussion Papers 53, Center of Applied Economic Research Münster (CAWM), University of Münster.
- Bordignon, Massimo, 1993. "A fairness approach to income tax evasion," Journal of Public Economics, Elsevier, vol. 52(3), pages 345-362, October.
- Stephan Muehlbacher & Erich Kirchler & Herbert Schwarzenberger, 2011. "Voluntary versus enforced tax compliance: empirical evidence for the “slippery slope” framework," European Journal of Law and Economics, Springer, vol. 32(1), pages 89-97, August.
- Hokamp, Sascha & Pickhardt, Michael, 2010.
"Income tax evasion in a society of heterogeneous agents: Evidence from an agent-based model,"
CAWM Discussion Papers
35, Center of Applied Economic Research Münster (CAWM), University of Münster.
- Sascha Hokamp & Michael Pickhardt, 2010. "Income Tax Evasion in a Society of Heterogeneous Agents - Evidence from an Agent-based Model," International Economic Journal, Korean International Economic Association, vol. 24(4), pages 541-553.
- Sascha Hokamp & Michael Pickhardt, . "Income Tax Evasion in a Society of Heterogeneous Agents – Evidence from an Agent-based Model," Working Papers 201035, Institute of Spatial and Housing Economics, Munster Universitary.
- Pyle, D J, 1991. " The Economics of Taxpayer Compliance," Journal of Economic Surveys, Wiley Blackwell, vol. 5(2), pages 163-98.
- Kirchler, Erich & Hoelzl, Erik & Wahl, Ingrid, 2008. "Enforced versus voluntary tax compliance: The "slippery slope" framework," Journal of Economic Psychology, Elsevier, vol. 29(2), pages 210-225, April.
- Cowell, F. A., 1992. "Tax evasion and inequity," Journal of Economic Psychology, Elsevier, vol. 13(4), pages 521-543, December.
- Myles, Gareth D. & Naylor, Robin A., 1996. "A model of tax evasion with group conformity and social customs," European Journal of Political Economy, Elsevier, vol. 12(1), pages 49-66, April.
- Georg Zaklan & Frank Westerhoff & Dietrich Stauffer, 2009.
"Analysing tax evasion dynamics via the Ising model,"
Journal of Economic Interaction and Coordination,
Springer, vol. 4(1), pages 1-14, June.
- Georg Zaklan & Frank Westerhoff & Dietrich Stauffer, 2008. "Analysing tax evasion dynamics via the Ising model," Papers 0801.2980, arXiv.org.
- Hommes, Cars H., 2006.
"Heterogeneous Agent Models in Economics and Finance,"
Handbook of Computational Economics,
in: Leigh Tesfatsion & Kenneth L. Judd (ed.), Handbook of Computational Economics, edition 1, volume 2, chapter 23, pages 1109-1186
- Cars H. Hommes, 2005. "Heterogeneous Agent Models in Economics and Finance," Tinbergen Institute Discussion Papers 05-056/1, Tinbergen Institute.
- Matthew D. Rablen, 2010. "Tax Evasion and Exchange Equity: A Reference-Dependent Approach," Public Finance Review, , vol. 38(3), pages 282-305, May.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Geraldine Ludbrook).
If references are entirely missing, you can add them using this form.