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Tax compliance under tax regime changes

  • Heinemann, Friedrich
  • Kocher, Martin G.

In this paper we focus on the compliance effects of tax regime changes. According to the economic model of tax evasion, a tax reform should affect compliance through its impact on tax rates and incentives. Our findings demonstrate the importance of at least two further effects not covered by the traditional model: First, reform losers tend to evade more taxes after the reform. Second, a reform from a proportionate to a progressive system decreases compliance compared to a switch in the reverse direction. However, the level of compliance is generally higher under a progressive than under a proportionate regime.

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Paper provided by University of Munich, Department of Economics in its series Munich Reprints in Economics with number 18179.

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Date of creation: Apr 2013
Date of revision:
Publication status: Published in International Tax and Public Finance 2 20(2013-04): pp. 225-246
Handle: RePEc:lmu:muenar:18179
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