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Understanding Surveys of Taxpayer Honesty

Author

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  • Janine L. F. Wilson
  • Steven Sheffrin

Abstract

Standard models of taxpayer compliance have fallen short of predicting the degree of honesty found in the data. We contribute to the more recent literature assessing cultural factors in the decision to underreport. We find that there are two forms of possible misspecification in the current models of taxpayer compliance. First, we use econometric methods for detecting misclassification of the dependent variable in a probit model, applying them to a recent IRS-sponsored survey. We find evidence of misspecification, which may suggest that taxpayers are not fully truthful in their survey responses, a result that helps to reconcile findings from survey data with studies using other methods. Second, we divide the sample into those individuals who have an intense sense of "tax morality" and those who do not, in order to compare groups with differing tax cultures. We find that the two groups are indeed influenced differently by the factors that have been commonly found in the literature, such as opinions regarding the fairness of the tax system.

Suggested Citation

  • Janine L. F. Wilson & Steven Sheffrin, 2005. "Understanding Surveys of Taxpayer Honesty," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 61(2), pages 256-256, July.
  • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(200507)61:2_256:usoth_2.0.tx_2-_
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    Citations

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    Cited by:

    1. Kirchler, Erich & Wahl, Ingrid, 2010. "Tax compliance inventory TAX-I: Designing an inventory for surveys of tax compliance," Journal of Economic Psychology, Elsevier, vol. 31(3), pages 331-346, June.
    2. Pickhardt, Michael & Prinz, Aloys, 2014. "Behavioral dynamics of tax evasion – A survey," Journal of Economic Psychology, Elsevier, vol. 40(C), pages 1-19.
    3. Durham, Yvonne & Manly, Tracy S. & Ritsema, Christina, 2014. "The effects of income source, context, and income level on tax compliance decisions in a dynamic experiment," Journal of Economic Psychology, Elsevier, vol. 40(C), pages 220-233.
    4. Kastlunger, Barbara & Dressler, Stefan G. & Kirchler, Erich & Mittone, Luigi & Voracek, Martin, 2010. "Sex differences in tax compliance: Differentiating between demographic sex, gender-role orientation, and prenatal masculinization (2D:4D)," Journal of Economic Psychology, Elsevier, vol. 31(4), pages 542-552, August.
    5. Juan Molero & Francesc Pujol, 2012. "Walking Inside the Potential Tax Evader’s Mind: Tax Morale Does Matter," Journal of Business Ethics, Springer, vol. 105(2), pages 151-162, January.

    More about this item

    Keywords

    tax compliance; misspecification of dependent variable;

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities

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