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On the path-dependence of tax compliance

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  • Lisa Bruttel
  • Tim Friehe

Abstract

This paper presents experimental evidence that tax compliance is path dependent. We show that individuals faced with the same current tax enforcement parameters, will nevertheless choose different compliance if they have faced different tax enforcement parameters in the past. This finding has important policy implications. For instance, legal harmonization in the EU cannot be expected to reliably yield similar behavior in countries with different legal histories.

Suggested Citation

  • Lisa Bruttel & Tim Friehe, 2010. "On the path-dependence of tax compliance," TWI Research Paper Series 59, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
    • Handle: RePEc:twi:respas:0059
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    Cited by:

    1. Müller, Martin & Olsen, Jerome & Kirchler, Erich & Kogler, Christoph, 2023. "How explicit expected value information affects tax compliance decisions and information acquisition," Journal of Economic Psychology, Elsevier, vol. 99(C).
    2. Cagala, Tobias & Glogowsky, Ulrich & Rincke, Johannes, 2014. "A field experiment on intertemporal enforcement spillovers," Economics Letters, Elsevier, vol. 125(2), pages 171-174.
    3. Kamm, Aaron & Koch, Christian & Nikiforakis, Nikos, 2017. "The ghost of institutions past: History as an obstacle to fighting tax evasion," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168271, Verein für Socialpolitik / German Economic Association, revised 2017.
    4. Lisa Bruttel & Tim Friehe, 2011. "Path dependence in public-good games," TWI Research Paper Series 67, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
    5. Feess, Eberhard & Sarel, Roee, 2022. "Optimal fine reductions for self-reporting: The impact of loss aversion," International Review of Law and Economics, Elsevier, vol. 70(C).
    6. Gerlinde Fellner-Röhling & Sabine Kröger & Erika Seki, 2021. "Information Regime Changes and Path Dependence - An Experimental Analysis of Public Goods Contributions in Heterogeneous Groups," CIRANO Working Papers 2021s-13, CIRANO.
    7. Kogler, Christoph & Mittone, Luigi & Kirchler, Erich, 2016. "Delayed feedback on tax audits affects compliance and fairness perceptions," Journal of Economic Behavior & Organization, Elsevier, vol. 124(C), pages 81-87.
    8. James Alm & Antoine Malézieux, 2021. "40 years of tax evasion games: a meta-analysis," Experimental Economics, Springer;Economic Science Association, vol. 24(3), pages 699-750, September.
    9. Koch, Christian & Müller, Cornelius, 2024. "Tax amnesties and the insurance effect: An experimental study," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 108(C).
    10. Kogler, Christoph & Olsen, Jerome & Bogaers, Rebecca I., 2020. "Enhanced anonymity in tax experiments does not affect compliance," Journal of Economic Behavior & Organization, Elsevier, vol. 177(C), pages 390-398.
    11. Bruttel, Lisa & Friehe, Tim, 2014. "Can short-term incentives induce long-lasting cooperation? Results from a public-goods experiment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 53(C), pages 120-130.
    12. Florian Baumann & Tim Friehe & Pascal Langenbach, 2020. "Fines versus Damages: Experimental Evidence on Care Investments," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2020_08, Max Planck Institute for Research on Collective Goods, revised Mar 2024.
    13. Juan Camilo Fernández-Marín & Nadja Simone Menezes Nery Oliveira & Paulo Mourao, 2022. "The role of policies in transforming regional fiscal structures: an exploratory analysis of spatial data from a policy of fiscal decentralization in Latin America," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 11(1), pages 1-24, December.
    14. Kamm, Aaron & Koch, Christian & Nikiforakis, Nikos, 2021. "The ghost of institutions past: History as an obstacle to fighting tax evasion?," European Economic Review, Elsevier, vol. 132(C).
    15. Ioana Alexandra HORODNIC & Colin C WILLIAMS & Rodica IANOLE-CÄ‚LIN, 2020. "Does higher cash-in-hand income motivate young people to engage in under-declared employment?," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 11, pages 48-69, December.

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    More about this item

    Keywords

    tax compliance; path dependence; experiment;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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