Political Support and Tax Compliance: A Social Interaction Approach

38 Pages Posted: 11 Jan 2010

See all articles by Chaim Fershtman

Chaim Fershtman

Tel Aviv University - Eitan Berglas School of Economics; Tinbergen Institute

Vilen Lipatov

Compass Lexecon Brussels

Date Written: November 2009

Abstract

People may express their political opinion by adopting different measures of civil disobedience. Tax compliance is an example of an economic decision that may be affected by anti-goverment sentiment. We consider a model in which political opinion as well as tax compliance decisions are both formed as part of a social interaction process in which individuals interact, exchange ideas and observe behavior. Tax compliance is affected by the level of government support and political opinion may be affected by government's auditing policy. The government's role is to set a social spending program which is viewed differently by rich and poor individuals. The paper focuses on the interdependence between tax compliance, government's social policies and political support, embedding this interdependence in a dynamic social interaction process.

Keywords: political opinion, social interaction, tax evasion

JEL Classification: H26, H50, P16

Suggested Citation

Fershtman, Chaim and Lipatov, Vilen, Political Support and Tax Compliance: A Social Interaction Approach (November 2009). CEPR Discussion Paper No. DP7554. Available at SSRN: https://ssrn.com/abstract=1533140

Chaim Fershtman (Contact Author)

Tel Aviv University - Eitan Berglas School of Economics ( email )

P.O. Box 39040
Ramat Aviv, Tel Aviv, 69978
Israel
+972 3 640 7167 (Phone)
+972 3 640 9908 (Fax)

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Vilen Lipatov

Compass Lexecon Brussels ( email )

23 Square de Meeus
Bruxelles, 1000
Belgium

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
4
Abstract Views
587
PlumX Metrics