De Neve, Jan-Emmanuel, Lamberton, Cait and Norton, Michael I. (2014) Eliciting taxpayer preferences increases tax compliance. CEP Discussion Papers (CEPDP1270). London School of Economics and Political Science. Centre for Economic Performance, London, UK.
|
PDF
- Published Version
Download (813kB) | Preview |
Abstract
Two experiments show that eliciting taxpayer preferences on government spending—providing taxpayer agency--increases tax compliance. We first create an income and taxation environment in a laboratory setting to test for compliance with a lab tax. Allowing a treatment group to express nonbinding preferences over tax spending priorities, leads to a 16% increase in tax compliance. A followup online study tests this treatment with a simulation of paying US federal taxes. Allowing taxpayers to signal their preferences on the distribution of government spending, results in a 15% reduction in the stated take-up rate of a questionable tax loophole. Providing taxpayer agency recouples tax payments with the public services obtained in return, reduces general anti-tax sentiment, and holds satisfaction with tax payment stable despite increased compliance with tax dues. With tax noncompliance costing the US government $385billion annually, providing taxpayer agency could have meaningful economic impact. At the same time, giving taxpayers a voice may act as a two-way "nudge," transforming tax payment from a passive experience to a channel of communication between taxpayers and government.
Actions (login required)
 |
View Item |
Download Statistics
Download Statistics