Honesty or dishonesty of taxpayer communications in an enforcement regime |
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Institution: | 1. Paris School of Economics and University Paris 1 Panthéon-Sorbonne. CES, 106 Bd. de l’hôpital, Paris 75013, France;2. Aix-Marseille Univ., CNRS, EHESS, Centrale Marseille, AMSE, 5-9 Boulevard Maurice Bourdet, 13001 Marseille, France;3. CEREN, EA 7477, Burgundy School of Business, Université Bourgogne Franche-Comté, 29 Rue Sambin, Dijon 21000, France;4. Department of Economics, University of Wyoming, Laramie, WY 82071-3985, United States;1. University of Osnabrück, Germany;2. Centre for Behavioural Economics, Society and Technology, Queensland University of Technology, Australia;3. School of Economics and Finance, Queensland University of Technology, Australia;4. CESifo, Germany;5. CREMA – Center for Research in Economics, Management and the Arts, Switzerland;6. Walter Eucken Institute, Freiburg, Germany;7. University of Freiburg, Germany;8. German Council of Economic Experts, Germany;9. University of Basel, Switzerland |
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Abstract: | In many settings the true likelihood of capture when engaging in an illegal activity, such as tax evasion, is not well known to an individual. “Official” statements from the tax administration regarding enforcement effort provide some information. In addition, “informal”, or “unofficial”, communication among taxpayers can supplement these official announcements, but individuals do not know with certainty whether such unofficial information is honest (or accurate) versus dishonest (or inaccurate). We examine the truthfulness of an individual’s revelation of unofficial information to other individuals, along with the factors that affect any revelation, focusing on the intrinsic motivations for revelations. Our experimental design allows us to examine the type and the honesty of messages that an individual chooses to send to other individuals regarding their own audit outcome and their own compliance behavior. Our results indicate that most individuals send accurate messages about their own audit outcomes and their own compliance behaviors. Nevertheless, many individuals are also systematically dishonest about being audited; that is, we observe a significant tendency for individuals to claim that they were audited when they were not. We also observe a strong interaction between individuals’ audit outcomes and their compliance behaviors, so that individuals who engaged in tax evasion and who were audited were more truthful in their communications than those whose tax evasion went undetected. |
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Keywords: | Tax compliance Tax audits Information Honesty Experimental economics 2360 2910 3020 3040 3120 H2 H26 C91 |
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