Does Tax Avoidance Trickle Down? Evidence from a Field Experiment

Justin Holz, Ricardo Perez-Truglia and Alejandro Zentner

No 34209, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The wealthiest individuals frequently engage in tax avoidance, and public awareness of this behavior is growing. Such awareness may undermine tax compliance among the broader population, either by revealing strategies others can emulate or by shifting social norms to make avoidance seem more acceptable. We first document that individuals are less tolerant of both tax avoidance and tax evasion when carried out by the wealthiest households. We next present results from a field experiment on property tax appeals, which—like other forms of tax avoidance—is used disproportionately by the wealthiest households. Providing information about the appeal rates of the richest-1% of households increased individuals’ perceptions of unfairness, but did not affect their own appeal decisions—measured via administrative records—or even their expected tax savings. Information about the prevalence of appeals among comparable households also had no effect. By contrast, information about the expected financial gains from appealing had a significant effect on appeal choices. In sum, while the public condemns tax avoidance by the wealthiest households, we find no sign that such behavior encourages similar actions among the broader population.

JEL-codes: C9 H26 Z13 (search for similar items in EconPapers)
Date: 2025-09
New Economics Papers: this item is included in nep-acc, nep-exp, nep-iue and nep-pbe
Note: LE PE
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