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Fighting Income Tax Evasion with Positive Rewards

Author

Listed:
  • Cécile Bazart

    (University of Montpellier I, Montpellier, France)

  • Michael Pickhardt

    (University of Muenster, Muenster, Germany, michael@pickhardt.com)

Abstract

This article provides experimental evidence regarding the influence of positive rewards on income tax evasion behavior. In particular, the authors experimentally test the impact of positive rewards in the form of individual lottery winnings for fully compliant taxpayers. Among other things, the authors find that these positive rewards lead to a higher rate of tax compliance. Moreover, there are two gender effects. Males not only evade taxes to a much higher extent than females they also show a stronger positive response to the lottery scheme. This allows us to draw some interesting policy recommendations on the efficient use of rewards as a complement of deterrence policies for fighting tax evasion.

Suggested Citation

  • Cécile Bazart & Michael Pickhardt, 2011. "Fighting Income Tax Evasion with Positive Rewards," Public Finance Review, , vol. 39(1), pages 124-149, January.
    • Handle: RePEc:sae:pubfin:v:39:y:2011:i:1:p:124-149
    DOI: 10.1177/1091142110381639
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Bazart, C. & Bonein, A., 2014. "Reciprocal relationships in tax compliance decisions," Journal of Economic Psychology, Elsevier, vol. 40(C), pages 83-102.
    2. Christoph Kogler & Stephan Muehlbacher & Erich Kirchler, 2015. "Testing the “slippery slope framework” among self-employed taxpayers," Economics of Governance, Springer, vol. 16(2), pages 125-142, May.
    3. Sascha Hokamp & Götz Seibold, 2014. "Tax Compliance and Public Goods Provision. An Agent-based Econophysics Approach," Central European Journal of Economic Modelling and Econometrics, Central European Journal of Economic Modelling and Econometrics, vol. 6(4), pages 217-236, December.
    4. Fatas, Enrique & Nosenzo, Daniele & Sefton, Martin & Zizzo, Daniel John, 2021. "A self-funding reward mechanism for tax compliance," Journal of Economic Psychology, Elsevier, vol. 86(C).
    5. Pickhardt, Michael & Prinz, Aloys, 2014. "Behavioral dynamics of tax evasion – A survey," Journal of Economic Psychology, Elsevier, vol. 40(C), pages 1-19.
    6. Romaniuc Rustam, 2016. "What Makes Law to Change Behavior? An Experimental Study," Review of Law & Economics, De Gruyter, vol. 12(2), pages 447-475, July.
    7. Ann-Kathrin Koessler & Benno Torgler & Lars P. Feld & Bruno S. Frey, 2016. "Commitment to Pay Taxes: A Field Experiment on the Importance of Promise," CESifo Working Paper Series 6186, CESifo.
    8. Sascha Hokamp & Michael Pickhardt, "undated". "Pareto-optimality in Linear Public Goods Games," Working Papers 201171, Institute of Spatial and Housing Economics, Munster Universitary.
    9. Hokamp, Sascha, 2014. "Dynamics of tax evasion with back auditing, social norm updating, and public goods provision – An agent-based simulation," Journal of Economic Psychology, Elsevier, vol. 40(C), pages 187-199.
    10. Koessler, Ann-Kathrin & Torgler, Benno & Feld, Lars P. & Frey, Bruno S., 2019. "Commitment to pay taxes: Results from field and laboratory experiments," European Economic Review, Elsevier, vol. 115(C), pages 78-98.
    11. James Alm, 2019. "What Motivates Tax Compliance?," Journal of Economic Surveys, Wiley Blackwell, vol. 33(2), pages 353-388, April.
    12. Colin C. Williams & Friedrich Schneider, 2016. "Measuring the Global Shadow Economy," Books, Edward Elgar Publishing, number 16551.
    13. Iskandar, Deden Dinar & Bhaduri, Anik & Wunscher, Tobias, 2016. "The determinants of compliance with environmental tax: Behavioural study motivated by the case of Indonesia," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 11(1), pages 1-14, March.
    14. Gaetano Lisi, 2019. "Slippery slope framework, tax morale and tax compliance: a theoretical integration and an empirical assessment," Discussion Papers in Economic Behaviour 0219, University of Valencia, ERI-CES.

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