| By: |
Luigi Mittone;
Matteo Ploner;
Eugenio Verrina |
| Abstract: |
We provide a test of the effect of aggressive fiscal policies on tax com-
pliance in the lab. Our experimental setup allows tax agents to break a
deontological rule concerning the implementation of audits on a group of tax
payers. In one incentive condition, tax agents have a direct monetary benefit
from higher compliance; in another, they have none. Tax payers, on the other
hand, go through a phase of stringent controls under their tax agents and one
where audit probabilities are fixed and implemented by a random device. We
find that tax agents bend the rules to their advantage. Many either perform
very frequent audits or place them in a strategic way, thus enforcing a norm
of high compliance. Those following the rules have no success. Surprisingly,
this is true for both incentive conditions. Tax payers exposed to these audit
strategies display nearly full compliance and con- tinue to do so also when
tax agents are inactive. We conclude that cunning fiscal policies can
effectively be used by tax authorities, if it is transparent that they lead to
higher overall compliance. This establishes a virtuous norm that can have
positive spillovers even in domains where the state has less coercive power. |
| Keywords: |
Tax evasion, die under the cup, taxpaying strategies, audit strategies, endogenous audits; Tax evasion, die under the cup, taxpaying strategies, audit strategies, endogenous audits |
| JEL: |
C91 C92 H24 H26 H83 |
| Date: |
2017 |
| URL: |
http://d.repec.org/n?u=RePEc:trn:utwpce:1702&r=iue |