Trust Breeds Trust: How Taxpayers are Treated

Lars Feld and Bruno Frey

No 98, IEW - Working Papers from Institute for Empirical Research in Economics - University of Zurich

Abstract: Tax compliance has been studied in economics by analysing the individual decision of a representative person between paying and evading taxes. A neglected aspect of tax compliance is the interaction of taxpayers and tax authorities. The relationship between the two actors can be understood as an implicit or "psychological" contract. Studies on tax evasion in Switzerland show that the more strongly the political participation rights are developed, the more important this contract is, and the higher tax morale is. In this paper, empirical evidence based on a survey of tax authorities of the 26 Swiss states (cantons) is presented, indicating that the differences in the treatment of taxpayers by tax authorities can be explained by differences in political participation rights as well.

Keywords: Tax Evasion; Tax Authority; Tax Compliance; Direct Democracy (search for similar items in EconPapers)
JEL-codes: D73 D78 H26 H73 (search for similar items in EconPapers)
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Citations: View citations in EconPapers (280)

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Related works:
Journal Article: Trust breeds trust: How taxpayers are treated (2002)
Working Paper: Trust Breeds Trust: How Taxpayers are Treated (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:zur:iewwpx:098

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