How choice architecture can promote and undermine tax compliance: Testing the effects of prepopulated tax returns and accuracy confirmation

Wilco W. van Dijk, Sjoerd Goslinga, Bart W. Terwel and Eric van Dijk

Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), 2020, vol. 87, issue C

Abstract: We tested the effects of prepopulated returns and accuracy confirmation on compliance. Participants were asked to report correct liabilities for different types of returns, whereby some had to confirm the accuracy of each reported liability and others not. Results showed that correctly prefilled returns yielded the highest rate of compliance, followed by returns that were not prefilled, followed by returns that overestimated liabilities, and with returns that underestimated liabilities displaying the lowest compliance. Moreover, accuracy confirmation increased compliance only for returns that overestimated liabilities. The present study indicates that both morality and defaults play a pivotal role in shaping the effects of prepopulated returns on compliance. Our findings imply that prepopulating tax returns should be done with care, because it can increase tax compliance when done correctly, but undermine it when done incorrectly.

Keywords: Default effects; Prepopulated tax returns; Tax compliance; Moral costs; Status quo bias (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:soceco:v:87:y:2020:i:c:s2214804320301208

DOI: 10.1016/j.socec.2020.101574

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