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Social Norms and Conditional Cooperative Taxpayers

  • This paper incorporates tax morale into the Allingham and Sandmo (1972) model of income tax evasion. Tax morale is modeled as a social norm for tax compliance. The strength of the norm is shaped endogenously, depending on the share of evaders in the society. Taxpayers act conditionally cooperative as their evasion depends on the others' compliance. We characterize the equilibrium which accounts for this interdependence and study the implications for tax and enforcement policies. The analysis is extended to the case of a society consisting of heterogenous communities. Individual evasion decisions are then embedded in a complex social structure and behavior is influenced by the norm compliance among morale reference groups. Within this framework, we highlight the role of belief management as an alternative policy tool.

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Metadaten
Document Type:Article
Language:English
Author(s):Christian Traxler
Parent Title (English):European Journal of Political Economy
ISSN:0176-2680
Publication year:2010
Publishing Institution:Hertie School
First Page:89
Last Page:103
DOI:https://doi.org/10.1016/j.ejpoleco.2009.11.001
Release Date:2017/08/02
Tag:Belief management; Conditional cooperation; Multiple equilibria; Social norms; Tax evasion
Volume:26
Issue:1
Notes:
This is a post-peer-review, pre-copyedit version of an article published in European Journal of Political Economy. The final authenticated version is available online at: DOI 10.1016/j.ejpoleco.2009.11.001
Licence of document (German):Metadaten (öffentlich), post-print
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