Previous research argues that law expresses social values and could,
therefore, influence individual behavior independently of enforcement and
penalization. Using three laboratory experiments on tax avoidance and evasion,
we study how legality affects individuals’ decisions. We find that, without
any risk of negative financial consequences, the qualification of tax
minimization as illegal versus legal reduces tax minimization considerably.
Legislators can thus, in principle, affect subjects’ decisions by defining the
borderline between legality and illegality. However, once we introduce
potential negative financial consequences, legality does not affect tax
minimization. Only if we use moral priming to increase subjects’ moral cost do
we again find a legality effect on tax minimization. Overall, this
demonstrates the limitations of the expressive function of law. Legality
appears to be an important determinant of behavior only if we consider
activities with no or low risk of negative financial consequences or if
subjects are morally primed
