On the path dependence of tax compliance

Lisa Bruttel and Tim Friehe

European Economic Review, 2014, vol. 65, issue C, 90-107

Abstract: This paper presents experimental evidence that tax compliance is path dependent. For given values of the audit probability and the fine for tax evasion, we compare the income declaration of subjects who faced a change in one of the two parameters to that of subjects who experienced no such parameter change. We show that past tax enforcement regimes continue to have an impact on current income declarations. This finding may be explained by reference-dependent preferences and it has important policy implications. For instance, legal transplants cannot be expected to reliably yield similar behavior in countries with different legal histories.

Keywords: Tax compliance; Path dependence; Reference dependence; Experiment (search for similar items in EconPapers)
JEL-codes: C91 H26 K42 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Related works:
Working Paper: On the path-dependence of tax compliance (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:65:y:2014:i:c:p:90-107

DOI: 10.1016/j.euroecorev.2013.11.002

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