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Vertical and Horizontal Reciprocity in a Theory of Taxpayer Compliance


  • Jan Schnellenbach

    () (Ruprecht-Karls-Universitat Heidelberg, Alfred Weber Institute for Economics)


This paper examines the interplay of horizontal and vertical reci- procity in determining the degree of tax compliance. Horizontal reciprocity is of the type that is frequently observed in public goods games, where reciprocally minded taxpayers may respond to non-contributing, strictly sel sh taxpayers by mimicking their sel sh behaviour. Vertical reciprocity is located in the relationship between the taxpayer and her government. Some recent empirical evidence is suggesting that initial cooperation of taxpayers with the scal authorities is not so much the result of positive reciprocity, but rather of a general tendency to obey authorities. Vertical reciprocity is therefore modeled as the propensity of taxpayers to retaliate against an uncooperative government by means of reducing the level of tax compliance. This allows us to identify feedback mechanisms between horizontal and vertical reciprocity.

Suggested Citation

  • Jan Schnellenbach, 2007. "Vertical and Horizontal Reciprocity in a Theory of Taxpayer Compliance," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0726, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  • Handle: RePEc:ays:ispwps:paper0726

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    References listed on IDEAS

    1. Erwin H Tiongson & Hamid R Davoodi & Sanjeev Gupta, 2000. "Corruption and the Provision of Health Care and Education Services," IMF Working Papers 00/116, International Monetary Fund.
    2. Benno Torgler & Friedrich Schneider, 2007. "What Shapes Attitudes Toward Paying Taxes? Evidence from Multicultural European Countries," Social Science Quarterly, Southwestern Social Science Association, vol. 88(2), pages 443-470.
    3. Benno Torgler, 2003. "Tax Morale in Transition Countries," Post-Communist Economies, Taylor & Francis Journals, vol. 15(3), pages 357-381.
    4. repec:cup:apsrev:v:68:y:1974:i:03:p:973-988_10 is not listed on IDEAS
    5. Jan Hanousek & Filip Palda, 2004. "Quality of Government Services and the Civic Duty to Pay Taxes in the Czech and Slovak Republics, and other Transition Countries," Kyklos, Wiley Blackwell, vol. 57(2), pages 237-252, May.
    6. Katarina Ott, 2004. "The Evolution of the Informal Economy and Tax Evasion in Croatia," Taxation eJournal of Tax Research , ATAX, University of New South Wales.
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    Cited by:

    1. William F. Fox & Matthew N. Murray, 2014. "Taxing the small: Fostering tax compliance among small enterprises in developing countries," Chapters,in: Taxation and Development: The Weakest Link?, chapter 6, pages 170-192 Edward Elgar Publishing.
    2. Bazart, C. & Bonein, A., 2014. "Reciprocal relationships in tax compliance decisions," Journal of Economic Psychology, Elsevier, vol. 40(C), pages 83-102.
    3. R.Kavita Rao & Suranjali Tandon, 2016. "Revisiting the Tax Compliance Problem using Prospect Theory," Working Papers id:11225, eSocialSciences.
    4. Torgler, Benno, 2011. "Tax morale and compliance : review of evidence and case studies for Europe," Policy Research Working Paper Series 5922, The World Bank.
    5. Jaanika Merikull & Tairi Room & Karsten Staehr, 2013. "Perceptions of unreported economic activities in Baltic Firms. Individualistic and non-individualistic motives," Bank of Estonia Working Papers wp2012-8, Bank of Estonia, revised 04 Feb 2013.

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    tax compliance; tax morale; tax evasion; reciprocity;


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