What Goes Around Comes Around? Experimental Evidence of the Effect of Rewards on Tax Compliance

The current experimental study examined the effect of monetary rewards on tax compliance. Eighty-six participants were randomly assigned to one control and two reward conditions (low vs. high reward). Overall, tax compliance was not affected by the rewards. However, a change in compliance strategies was observed. It seems that rewards provoked an all-or-nothing behavior. Whereas in the reward conditions, participants were either completely honest or evaded all of their income, in the control condition, the amount of evasion varied more strongly. Furthermore, audited compliant taxpayers who are rewarded evaded less in the following period compared with audited compliant taxpayers who experienced no rewards.tax compliance; fines; rewards; positive incentives; bomb-crater effect

Sequences of audits, tax compliance, and taxpaying strategies

The effect of different audit patterns on future compliance is studied in two experiments. A repeated measures design is used with participants filing taxes 60 times. Study 1 focuses on taxpayers' immediate reactions to audits and examines whether a strong decrease in compliance following an audit is caused by either misperception of chance or loss repair. The second purpose of this study is to investigate the effect of audit positioning in a "taxpaying life span". The results suggest that the decrease of compliance found after an audit is most likely caused by misperception of chance, while loss-repair tendencies are of moderate relevance. Moreover, results confirm that contrary to later audits, early audit experiences in a "taxpaying life span" lead to increased compliance. Independent of audit positioning, compliance decreases if participants are not audited over an extended period of time. It is hypothesized that just one further audit may suffice to increase compliance again. Study 2 confirms this assumption. The results show the relevance of specific audit patterns on tax compliance.Tax compliance Audits Misperception of chance Loss repair Taxpaying strategies

Why Pay Taxes? A Review of Tax Compliance Decisions

Since the standard model of income tax evasion (Allingham & Sandmo, 1972; Srinivasan, 1973) was published, much research has tested its four parameters (level of actual income, tax rate, audit probability, penalty rate) for empirical validity. Surveys, laboratory experiments and analysis of aggregate data revealed ambiguous evidence for the model’s behavioral implications. The present article reviews these studies and concludes that compliance decisions can only partly be explained by the rational choice approach. We suggest that depending on the climate in a society, compliance stems from two different factors. In a climate of distrust, high power of authorities is needed to enforce tax compliance and increasing fines and audit probabilities may be an effective tax policy. In a climate where taxpayers trust the authorities of their state, however, other variables gain in importance. Knowledge, attitudes, moral appeals, fairness and democracy may lead to voluntary compliance. In this case, draconian fines and intrusive audits can take unintentional effects and would corrupt tax morale.compliance decisions, tax evasion, audits, fines, trust

Sex differences in tax compliance: Differentiating between demographic sex, gender-role orientation, and prenatal masculinization (2D:4D)

We used decision-making experiments to investigate tax compliance of women and men and focused on gender-role orientation as well as on the second-to-fourth digit ratio (2D:4D), a putative marker of prenatal testosterone exposure. In 60 experimental periods, participants were endowed with a certain amount of money representing income and had to pay taxes. They were audited with a certain probability and fined in case of detected evasion. Both demographic sex and gender-role orientation were significantly related to tax compliance, whereas 2D:4D was not. Women and less male-typical individuals were more compliant than men and more male-typical individuals. Women and men also differed regarding their taxpaying strategies. Whereas for men audits increased subsequent evasion, women's tax payments were less affected by prior audits.Tax compliance Sex differences Gender-role orientation Digit ratio (2D:4D) Prenatal testosterone

"Generation Praktikum" – Flexibilisierungsphänomen im Perspektivenwechsel: Praktika bei HochschulabsolventInnen - Chance oder Belastung?

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The Relationship Between Political Ideology and Attitudes Toward Tax Compliance: The Case of Italian Taxpayers

Research on tax behaviour or attitudes towards tax evasion has rarely taken into account the political preferences of taxpayers. The present research aimed to explore the relationship between political ideology and attitudes toward tax compliance within the \u201cslippery slope framework\u201d (Kirchler, Hoelzl, & Wahl, 2008). We conducted a quantitative survey (N = 272) and two online focus groups with self-employed taxpayers in Italy, and found significant differences between left-leaning and right-leaning taxpayers. These two groups were characterized by two different pathways that lead to greater tax compliance, and attached different meanings and values to tax behaviours. In particular, left-leaning taxpayers expressed higher levels of voluntary cooperation and showed reactance to the coercive power of authorities, whereas right-leaning taxpayers expressed higher levels of enforced tax compliance and were more averse to tax evasion with increased trust in authorities and institutions. Although further research on this topic is advisable, these results bear relevant theoretical and practical implications