Tax evasion and state productivity – An experimental study

Werner Güth (), Sabine Strauß and Matthias Sutter ()

Discussion Papers on Strategic Interaction from Max Planck Institute of Economics, Strategic Interaction Group

Abstract: In an overlapping generations-experiment with multiple families participants can either support their parents directly and thereby reduce their tax burden or hope for tax-financed old age support. State productivity is captured by the factor with which total tax revenues are multiplied to determine old age support. This factor is systematically varied from 0.75 to 1.25. Tax payments depend in declared endowment. Tax evasion is possible, but monitored. Surprisingly state productivity influences neither direct support of own parents nor tax evasion. The main effect is that rich endowment triggers relatively low support of own parents and high (and more frequent) tax evasion.

Keywords: tax evasion; state productivity; experiment; overlapping generations-model (search for similar items in EconPapers)
JEL-codes: C91 C92 H26 H55 (search for similar items in EconPapers)
Date: 2002-11
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ftp://papers.mpiew-jena.mpg.de/esi/discussionpapers/2002-37.pdf (application/pdf)

Related works:
Journal Article: TAX EVASION AND STATE PRODUCTIVITY-AN EXPERIMENTAL STUDY (2005)
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