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Fining Tax Evasion: Is Adjusting Fines to Level of Income Fairer Than Basing Fines Solely on the Evaded Amount?

Author

Listed:
  • Stephan Muehlbacher
  • Thomas Sabitzer

Abstract

Fines for tax evasion are usually based on the amount evaded. The present research shows that laypeople (N = 191) prefer income-adjusted fines in opinion polls, but in the role of a judge they would sometimes act differently. In a factorial survey experiment simulating the negotiation of a court case about tax evasion, fines were adjusted only to the defendant's income when details about the amount of evasion and the evader's income but not about the true tax liability were provided. When participants were informed also about the defendant's full tax liability, they imposed similar fines to high- and low-income earners.

Suggested Citation

  • Stephan Muehlbacher & Thomas Sabitzer, 2022. "Fining Tax Evasion: Is Adjusting Fines to Level of Income Fairer Than Basing Fines Solely on the Evaded Amount?," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 78(3), pages 291-311.
    • Handle: RePEc:mhr:finarc:urn:doi:10.1628/fa-2022-0011
    DOI: 10.1628/fa-2022-0011
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    More about this item

    Keywords

    income-adjusted fines; day fines; tax evasion; tax compliance; retributive fairness; survey experiments; income-adjustedfines; dayfines; taxevasion; taxcompliance; retributivefairness; surveyexperiments;
    All these keywords.

    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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