An Economic Model of Tax Compliance with Individual Morality and Group Conformity

Sour, Laura (2004): An Economic Model of Tax Compliance with Individual Morality and Group Conformity. Published in: Economía Mexicana Nueva Época , Vol. XIII, No. 1 (January 2004): pp. 43-61.

Abstract

Scholars in public finance traditionally have analyzed tax compliance using the Allighman-Sandmo model. I include in this model both moral and social payoffs for compliance. This approach can explain four pieces of evidence that have not been explained by the traditional model, namely i) high level of tax compliance; ii) honest responses when individuals pay their taxes, even in the presence of high incentives for tax evasion; iii) the level of evasion increases with the tax rate; and iv) individuals are more likely to evade when they realize that there is a large number of evaders in society.

• Item Type: MPRA Paper
• Language: English
• Keywords: tax compliance, evasion, social norms, honesty, moral values, social interaction.
• Subjects: A - General Economics and Teaching > A1 - General Economics > A13 - Relation of Economics to Social Values; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H24 - Personal Income and Other Nonbusiness Taxes and Subsidies; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H26 - Tax Evasion and Avoidance

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