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Culture, compliance, and confidentiality: Taxpayer behavior in the United States and Italy

James Alm (), Michele Bernasconi, Susan Laury, Daniel Lee () and Sally Wallace

Journal of Economic Behavior & Organization, 2017, vol. 140, issue C, 176-196

Abstract: This paper analyzes the impact of confidentiality of taxpayer information on the level of compliance in two countries with very different levels of citizen trust in government – the United States and Italy. Using identical laboratory experiments conducted in the two countries, we analyze the impact on tax compliance of “Full Disclosure” (e.g., release of photos of tax evaders to all subjects, along with information on the extent of their non-compliance) and of “Full Confidentiality” (e.g., no public dissemination of photos or non-compliance). Our empirical analysis applies a two-stage strategy that separates the evasion decision into its extensive (e.g., “participation”) and intensive (e.g. “amount”) margins. We find strong support for the notion that public disclosure acts as an additional deterrent to tax evaders, and that the deterrent effect is concentrated in the first stage of the two-stage model (or whether to evade or not). We also find that the deterrent effect is similar in the U.S. and in Italy, despite what appear to be different social norms of compliance in the two countries.

Keywords: Tax compliance; Experimental economics; Confidentiality; Social norms (search for similar items in EconPapers)
JEL-codes: H2 H3 (search for similar items in EconPapers)
Date: 2017
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Working Paper: Culture, Compliance, and Confidentiality: Taxpayer Behavior in the United States and Italy (2016) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:140:y:2017:i:c:p:176-196

DOI: 10.1016/j.jebo.2017.05.018

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Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

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