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Paying Your Fair Share: Perceived Fairness and Tax Compliance

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Listed:
  • Brad C. Nathan
  • Ricardo Perez-Truglia
  • Alejandro Zentner

Abstract

We provide evidence on the role of fairness for tax compliance: households are willing to pay more in taxes if they believe that other households are contributing their fair share. We conducted an information-disclosure natural field experiment in the context of property taxes in the United States. We induced exogenous shocks to households' perceptions about the average tax rate paid by other households. We find that a higher perceived average tax rate decreases the probability of filing a tax appeal. Translating our estimates into a money metric, we find that for each additional $1 contributed by the average household, a taxpayer is willing to pay an extra $0.43 in his or her own taxes.

Suggested Citation

  • Brad C. Nathan & Ricardo Perez-Truglia & Alejandro Zentner, 2024. "Paying Your Fair Share: Perceived Fairness and Tax Compliance," NBER Working Papers 32588, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:32588
    Note: PE POL
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    More about this item

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • H4 - Public Economics - - Publicly Provided Goods
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General

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