Who is audited? Experimental study of rule-based tax auditing
Yoshio Kamijo,
Takehito Masuda and
Hiroshi Uemura
ISER Discussion Paper from Institute of Social and Economic Research, Osaka University
Abstract:
We employed a game-theoretic framework to formulate and analyze a number of tax audit rules, especially the lowest income reporter audited rule. We explicitly considered the auditor’s resource constraint to choose one target from a continuous type of taxpayer. We then tested the theoretical predictions in a laboratory experiment, using three audit rules: the random, cut-off, and lowest income reporter audited rules. While the cut-off rule is known to be optimal in theory, it has not thus far been examined in a controlled laboratory experimental setting. Contrary to the theory, the lowest income reporter audited rule increased average compliance behavior significantly more compared with the optimal cut-off rule and, especially, the random rule. This holds with and without controlling the subjects’ demographics and attitudes regarding tax payment. This finding is practically important because the tax authorities in most countries assign higher priority to enhancing tax compliance.
Date: 2019-10
New Economics Papers: this item is included in nep-acc, nep-exp, nep-gth, nep-iue and nep-pbe
References: Add references at CitEc
Citations:
Downloads: (external link)
https://www.iser.osaka-u.ac.jp/library/dp/2019/DP1064.pdf
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:dpr:wpaper:1064
Access Statistics for this paper
More papers in ISER Discussion Paper from Institute of Social and Economic Research, Osaka University Contact information at EDIRC.
Bibliographic data for series maintained by Librarian ().