Details
| Original language | English |
|---|---|
| Pages (from-to) | 561-580 |
| Number of pages | 20 |
| Journal | European accounting review |
| Volume | 26 |
| Issue number | 3 |
| Early online date | 24 Nov 2016 |
| Publication status | Published - 2017 |
Abstract
In this paper, we use a tax compliance game with a public good to investigate the impact of public disclosure on tax evasion behavior experimentally. Three different types of tax privacy are tested, ranging from complete privacy to full disclosure. We expect two different effects: first, a contagion effect, arising when an individual observes non-compliance of other individuals and therefore reduces her own tax compliance; second, a shame effect of increased tax compliance due to the anticipated shame of being declared a tax evader. Both these effects are supported by the experimental results. However, the shame effect reduces tax evasion only in the short run. The influence of shame diminishes over the course of the experiment with subjects observing the non-compliance of other participants. Thus, our results indicate that when the contagion and the shame effect are present the latter is not strong enough to override the former in the long run. Furthermore, disclosing tax information anonymously increases tax evasion compared to providing no information on tax evasion behavior. These observations are of particular importance for tax policy because public disclosure may lead to more evasion instead of less when supporting a crowding-out of the tax morale.
ASJC Scopus subject areas
- Business, Management and Accounting(all)
- Accounting
Cite this
- Standard
- Harvard
- Apa
- Vancouver
- BibTeX
- RIS
In: European accounting review, Vol. 26, No. 3, 2017, p. 561-580.
Research output: Contribution to journal › Article › Research › peer review
}
TY - JOUR
T1 - The Effect of Tax Privacy on Tax Compliance
T2 - An Experimental Investigation
AU - Blaufus, Kay
AU - Bob, Jonathan
AU - Otto, Philipp E.
AU - Wolf, Nadja
N1 - Publisher Copyright: © 2016 European Accounting Association. Copyright: Copyright 2017 Elsevier B.V., All rights reserved.
PY - 2017
Y1 - 2017
N2 - In this paper, we use a tax compliance game with a public good to investigate the impact of public disclosure on tax evasion behavior experimentally. Three different types of tax privacy are tested, ranging from complete privacy to full disclosure. We expect two different effects: first, a contagion effect, arising when an individual observes non-compliance of other individuals and therefore reduces her own tax compliance; second, a shame effect of increased tax compliance due to the anticipated shame of being declared a tax evader. Both these effects are supported by the experimental results. However, the shame effect reduces tax evasion only in the short run. The influence of shame diminishes over the course of the experiment with subjects observing the non-compliance of other participants. Thus, our results indicate that when the contagion and the shame effect are present the latter is not strong enough to override the former in the long run. Furthermore, disclosing tax information anonymously increases tax evasion compared to providing no information on tax evasion behavior. These observations are of particular importance for tax policy because public disclosure may lead to more evasion instead of less when supporting a crowding-out of the tax morale.
AB - In this paper, we use a tax compliance game with a public good to investigate the impact of public disclosure on tax evasion behavior experimentally. Three different types of tax privacy are tested, ranging from complete privacy to full disclosure. We expect two different effects: first, a contagion effect, arising when an individual observes non-compliance of other individuals and therefore reduces her own tax compliance; second, a shame effect of increased tax compliance due to the anticipated shame of being declared a tax evader. Both these effects are supported by the experimental results. However, the shame effect reduces tax evasion only in the short run. The influence of shame diminishes over the course of the experiment with subjects observing the non-compliance of other participants. Thus, our results indicate that when the contagion and the shame effect are present the latter is not strong enough to override the former in the long run. Furthermore, disclosing tax information anonymously increases tax evasion compared to providing no information on tax evasion behavior. These observations are of particular importance for tax policy because public disclosure may lead to more evasion instead of less when supporting a crowding-out of the tax morale.
UR - http://www.scopus.com/inward/record.url?scp=84996866131&partnerID=8YFLogxK
U2 - 10.1080/09638180.2016.1258319
DO - 10.1080/09638180.2016.1258319
M3 - Article
AN - SCOPUS:84996866131
VL - 26
SP - 561
EP - 580
JO - European accounting review
JF - European accounting review
SN - 0963-8180
IS - 3
ER -