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Can whistleblower programs reduce tax evasion? Experimental evidence

David Masclet (), Claude Montmarquette and Nathalie Viennot-Briot

Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), 2019, vol. 83, issue C

Abstract: There are many ways of tackling tax evasion. The traditional strategies implemented by tax authorities fight fiscal fraud through audits and penalties. However, there also exist a plethora of unconventional methods, such as whistleblower programs. Although there is rich economic literature on tax evasion, auditing and penalties, tax agencies’ heavy reliance on whistleblower programs has mostly been ignored. We ran an experiment in which taxpayers can punish tax evaders by reporting them to the authorities, even though it is costly for them to do so and despite the lack of any material benefit from doing so. Information on other taxpayers' compliance rates together with the opportunity to report tax evaders have a positive and very significant effect on the level of income reported. Observing the compliance rates of other participants alone does not suffice to increase tax revenues.

Keywords: Fiscal fraud; Whistleblowers; Ambiguous risk; Laboratory experiment (search for similar items in EconPapers)
JEL-codes: C91 H26 H31 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:soceco:v:83:y:2019:i:c:s2214804318304695

DOI: 10.1016/j.socec.2019.101459

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Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics) is currently edited by Pablo Brañas Garza

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