Procedural Fairness and Taxpayersï¿½ï¿½ Response Evidence from an Experimen
We perform an experiment to investigate how the fairness of decision making procedures affects taxpayersï¿½ï¿½ 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.
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