Paying Your Fair Share: Perceived Fairness and Tax Compliance

Brad C. Nathan, Ricardo Perez-Truglia and Alejandro Zentner

No 32588, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We provide evidence on the role of perceived fairness for tax compliance: households are more willing to pay taxes when they believe others are contributing their fair share. We conducted a natural field experiment in the context of U.S. property taxes. Through an information-disclosure experiment, we exogenously shifted households’ perceptions of the average tax rate paid by others. We find that a higher perceived average tax rate increases perceptions of tax fairness and reduces the likelihood of filing a tax appeal. We measure the role of fairness with a money metric: for each additional $1 paid by the average household, a taxpayer is willing to contribute an extra $0.43. Using a complementary survey experiment, we show that some households are willing to tolerate lower tax rates for others in special circumstances, such as disabilities or older age.

JEL-codes: C93 H4 H70 (search for similar items in EconPapers)
Date: 2024-06
New Economics Papers: this item is included in nep-exp, nep-iue, nep-pbe and nep-pub
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