Paying Your Fair Share: Perceived Fairness and Tax Compliance

Brad C. Nathan, Ricardo Perez-Truglia and Alejandro Zentner

No 32588, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We provide evidence on the role of perceived fairness in tax compliance. Are households more willing to pay taxes when they believe others are contributing their fair share? We investigate this question through a natural field experiment in the context of U.S. property taxes. Using an information-disclosure experiment, we exogenously shifted households’ perceptions of the average tax rate paid by others. We find that higher perceived average tax rates increase perceptions of fairness and reduce the likelihood of filing a tax appeal. We quantify the effect of fairness in monetary terms: for every additional $1 paid by the average household, an individual taxpayer is willing to contribute an additional $0.43. In the field experiment, subjects were informed about the average tax rate but not why it might differ from their own. In a complementary survey, we show that this context matters: when households learn that others pay lower rates due to exemptions, such as for disability or advanced age, they are more willing to tolerate unequal tax rates.

JEL-codes: C93 H4 H70 (search for similar items in EconPapers)
Date: 2024-06
New Economics Papers: this item is included in nep-exp, nep-iue, nep-pbe and nep-pub
Note: PE POL
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.nber.org/papers/w32588.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:nbr:nberwo:32588

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w32588

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().