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Extrinsic and intrinsic motivations for tax compliance: evidence from a field experiment in Germany

Author

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  • Dwenger, Nadja
  • Kleven, Henrik
  • Rasul, Imran
  • Rincke, Johannes

Abstract

We study extrinsic and intrinsic motivations for tax compliance in the context of a local church tax in Germany. This tax system has historically relied on zero deterrence so that any compliance at baseline is intrinsically motivated. Starting from this zero deterrence baseline, we implement a field experiment that incentivized compliance through deterrence or rewards. Using administrative records of taxes paid and true tax liabilities, we use these treatments to document that intrinsically motivated compliance is substantial, that a significant fraction of it may be driven by duty-to-comply preferences, and that there is no crowd-out between extrinsic and intrinsic motivations.

Suggested Citation

  • Dwenger, Nadja & Kleven, Henrik & Rasul, Imran & Rincke, Johannes, 2016. "Extrinsic and intrinsic motivations for tax compliance: evidence from a field experiment in Germany," LSE Research Online Documents on Economics 66118, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:66118
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    1. Gerlinde Fellner & Rupert Sausgruber & Christian Traxler, 2009. "Testing Enforcement Strategies in the Field: Legal Threat, Moral Appeal and Social Information," Working Papers 2009-23, Faculty of Economics and Statistics, Universität Innsbruck.
    2. Blumenthal, Marsha & Christian, Charles W. & Slemrod, Joel, 2001. "Do Normative Appeals Affect Tax Compliance? Evidence from a Controlled Experiment in Minnesota," National Tax Journal, National Tax Association, vol. 54(n. 1), pages 125-38, March.
    3. Bruno S. Frey & Stephan Meier, 2004. "Social Comparisons and Pro-social Behavior: Testing "Conditional Cooperation" in a Field Experiment," American Economic Review, American Economic Association, vol. 94(5), pages 1717-1722, December.
    4. Gerlinde Fellner & Rupert Sausgruber & Christian Traxler, 2013. "Testing Enforcement Strategies In The Field: Threat, Moral Appeal And Social Information," Journal of the European Economic Association, European Economic Association, vol. 11(3), pages 634-660, June.
    5. Blumenthal, Marsha & Christian, Charles W. & Slemrod, Joel, 2001. "Do Normative Appeals Affect Tax Compliance? Evidence From a Controlled Experiment in Minnesota," National Tax Journal, National Tax Association;National Tax Journal, vol. 54(1), pages 125-138, March.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    tax compliance; intrinsic motivation; extrinsic motivation; filed experiment;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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