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Reciprocal Relationships in Tax Compliance Decisions

Author

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  • Cécile Bazart

    (LAMETA, University of Montpellier I, France)

  • Aurélie Bonein

    (University of Rennes 1 - CREM UMR CNRS 6211, France)

Abstract

Reciprocity considerations are important to the tax compliance problem as they may explain the global dynamics of tax evasion, beyond individual tax evasion decisions, toward a downward or upward spiral. To provide evidence on reciprocity in tax compliance decisions, we have conducted a laboratory experiment in which we introduced two types of inequities. The first type of inequity is called vertical, because it refers to inequities introduced by the government when it sets different fiscal parameters for identical taxpayers, while the second type of inequity is called horizontal because it refers to the fact that taxpayers may differ in tax compliance decisions. In this setting, taxpayers may react to a disadvantageous or advantageous inequity through negative or positive reciprocal behaviors, respectively. Our results support the existence of negative and positive reciprocity in both vertical and horizontal cases. When both inequities come into play and may induce reciprocal behaviors in opposite directions, the horizontal always dominates the vertical.

Suggested Citation

  • Cécile Bazart & Aurélie Bonein, 2012. "Reciprocal Relationships in Tax Compliance Decisions," Economics Working Paper Archive (University of Rennes & University of Caen) 201239, Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS.
    • Handle: RePEc:tut:cremwp:201239
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    More about this item

    Keywords

    Behavioral economics; Experimental economics; Fairness; Tax evasion; Tax compliance;
    All these keywords.

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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