Vertical and Horizontal Reciprocity in a Theory of Taxpayer Compliance

Jan Schnellenbach

International Center for Public Policy Working Paper Series, at AYSPS, GSU from International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University

Abstract: This paper examines the interplay of horizontal and vertical reci- procity in determining the degree of tax compliance. Horizontal reciprocity is of the type that is frequently observed in public goods games, where reciprocally minded taxpayers may respond to non-contributing, strictly sel sh taxpayers by mimicking their sel sh behaviour. Vertical reciprocity is located in the relationship between the taxpayer and her government. Some recent empirical evidence is suggesting that initial cooperation of taxpayers with the scal authorities is not so much the result of positive reciprocity, but rather of a general tendency to obey authorities. Vertical reciprocity is therefore modeled as the propensity of taxpayers to retaliate against an uncooperative government by means of reducing the level of tax compliance. This allows us to identify feedback mechanisms between horizontal and vertical reciprocity.

Keywords: tax compliance; tax morale; tax evasion; reciprocity (search for similar items in EconPapers)
Pages: 30 pages
Date: 2007-12-01
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:ays:ispwps:paper0726

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