An Economic Model of Tax Compliance with Individual Morality and Group Conformity

Laura Sour

MPRA Paper from University Library of Munich, Germany

Abstract: Scholars in public finance traditionally have analyzed tax compliance using the Allighman-Sandmo model. I include in this model both moral and social payoffs for compliance. This approach can explain four pieces of evidence that have not been explained by the traditional model, namely i) high level of tax compliance; ii) honest responses when individuals pay their taxes, even in the presence of high incentives for tax evasion; iii) the level of evasion increases with the tax rate; and iv) individuals are more likely to evade when they realize that there is a large number of evaders in society.

Keywords: tax compliance; evasion; social norms; honesty; moral values; social interaction. (search for similar items in EconPapers)
JEL-codes: A13 H24 H26 (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (5)

Published in Economía Mexicana Nueva Época 1.XIII(2004): pp. 43-61

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Journal Article: An Economic Model of Tax Compliance with Individual Morality and Group Conformity (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:50334

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