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Procedural Fairness and Taxpayers�� Response Evidence from an Experimen

Author

Listed:
  • Byung-hill Jun

    (Hankuk University of Foreign Studes)

  • Myeonghwan Cho

    (Sungkyunkwan University)

  • Myung-Ho Park

    (Korea Institute of Public Finance)

Abstract

We perform an experiment to investigate how the fairness of decision making procedures affects taxpayers�� income reporting behavior. According to our experiment, individuals tend to report more income, and thus evade less tax when majority voting determines a tax rate structure than when a dictatorship determines a tax rate structure. We also find that such a positive effect of majority voting occurs mainly through individuals dissatisfied with the current tax rate structure. These findings hint at a channel through which procedural fairness works to improve tax compliance.

Suggested Citation

  • Byung-hill Jun & Myeonghwan Cho & Myung-Ho Park, 2015. "Procedural Fairness and Taxpayers�� Response Evidence from an Experimen," Korean Economic Review, Korean Economic Association, vol. 31, pages 301-326.
  • Handle: RePEc:kea:keappr:ker-20151231-31-2-03
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    References listed on IDEAS

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    More about this item

    Keywords

    Tax Compliance; Experiment; Procedural Fairness; Voting;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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