Tax Amnesties and the Insurance Effect: An Experimental Study

Christian Koch and Cornelius Müller

VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy from Verein für Socialpolitik / German Economic Association

Abstract: Many countries grant exemption from legal prosecution under certain conditions, allowing for voluntary disclosures regarding tax evasion. Empirically, tax amnesties appear most successful when accompanied by an increase in enforcement efforts because they help evaders to adjust to the new circumstances. Time-limited amnesties are often repeated or in some countries even permanent. Anticipated tax amnesties can, however, serve as an insurance against a rise in the detection probability, potentially leading to less and not more tax compliance. We test the relevance of this insurance effect in an experimental tax game and disentangle it from an effect on tax morale, i.e., non-pecuniary motives to comply. We ftnd that the former effect indeed decreases overall tax compliance by about 7-10 percent, showing its relevance for the design of tax policies. A high predictability of amnesties may work to their detriment.

Keywords: tax compliance; tax amnesty; lab experiment; social norms (search for similar items in EconPapers)
JEL-codes: C91 H24 H26 (search for similar items in EconPapers)
Date: 2022, Revised 2022
New Economics Papers: this item is included in nep-exp, nep-iue, nep-law, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/251220/1/V ... -680-rev-03-2022.pdf (application/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:zbw:vfsc15:112991

Access Statistics for this paper

More papers in VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy from Verein für Socialpolitik / German Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().