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Deterrence and Morale in Taxation: An Empirical Analysis

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  • Bruno S. Frey
  • Lars P. Feld

Abstract

The standard model of tax evasion based on the subjective expected utility maximization does not perform particularly well in econometric analyses: it predicts too little evasion and produces unsatisfactory econometric parameter estimates. The model is extended by looking at how the tax authority deals with the taxpayers. Based on econometric estimates, it is shown that taxpayers’ tax morale is raised when the tax officials treat them with respect. In contrast, when tax officials solely rely on deterrence taxpayers tend to respond by actively trying to avoid taxation.

Suggested Citation

  • Bruno S. Frey & Lars P. Feld, 2002. "Deterrence and Morale in Taxation: An Empirical Analysis," CESifo Working Paper Series 760, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_760
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    File URL: http://www.cesifo-group.de/DocDL/760.pdf
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    References listed on IDEAS

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    1. Gneezy, Uri & Rustichini, Aldo, 2000. "A Fine is a Price," The Journal of Legal Studies, University of Chicago Press, vol. 29(1), pages 1-17, January.
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    More about this item

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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