Abstract

http://ssrn.com/abstract=2365751
 


 



Eliciting Taxpayer Preferences Increases Tax Compliance


Cait Poynor Lamberton


University of Pittsburgh - Katz Graduate School of Business

Jan‐Emmanuel De Neve


University College London; London School of Economics & Political Science (LSE)

Michael I. Norton


Harvard Business School - Marketing Unit

April 24, 2014


Abstract:     
Two experiments show that eliciting taxpayer preferences on government spending -- providing taxpayer agency -- increases tax compliance. We first create an income and taxation environment in a laboratory setting to test for compliance with a "lab tax.'' Allowing a treatment group to express non-binding preferences over tax spending priorities leads to a 16% increase in tax compliance. A follow-up online study tests this treatment with a simulation of paying US federal taxes. Allowing taxpayers to signal their preferences on the distribution of government spending results in a 15% reduction in the stated take-up rate of a questionable tax loophole. Providing taxpayer agency recouples tax payments with the public services obtained in return, reduces general anti-tax sentiment, and holds satisfaction with tax payment stable despite increased compliance with tax dues. With tax noncompliance costing the US government $385 billion annually, providing taxpayer agency could have meaningful economic impact. At the same time, giving taxpayers a voice may act as a two-way "nudge," transforming tax payment from a passive experience to a channel of communication between taxpayers and government.

Number of Pages in PDF File: 57

JEL Classification: D03, H26, H30, H50, I31

working papers series


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Date posted: December 11, 2013 ; Last revised: April 24, 2014

Suggested Citation

Lamberton, Cait Poynor and de Neve, Jan‐Emmanuel and Norton, Michael I., Eliciting Taxpayer Preferences Increases Tax Compliance (April 24, 2014). Available at SSRN: http://ssrn.com/abstract=2365751 or http://dx.doi.org/10.2139/ssrn.2365751

Contact Information

Cait Poynor Lamberton
University of Pittsburgh - Katz Graduate School of Business ( email )
Marketing Department
364 Mervis Hall
Pittsburgh, PA 15260
United States
Jan-Emmanuel De Neve (Contact Author)
University College London ( email )
29/30 Tavistock Square
London, WC1H 9QU
United Kingdom
London School of Economics & Political Science (LSE) ( email )
Houghton Street
London, WC2A 2AE
United Kingdom
HOME PAGE: http://personal.lse.ac.uk/deneve/
Michael I. Norton
Harvard Business School - Marketing Unit ( email )
Soldiers Field
Boston, MA 02163
United States
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