Culture, Compliance, and Confidentiality: Taxpayer Behavior in the United States and Italy

38 Pages Posted: 21 Dec 2016

See all articles by James Alm

James Alm

Tulane University

Michele Bernasconi

Università Ca' Foscari, Venezia - Department of Economics and SSE

Susan Laury

Georgia State University - Andrew Young School of Policy Studies

Daniel Lee

Rice University - Jesse H. Jones Graduate School of Business

Sally Wallace

Georgia State University - Department of Economics; University of Pretoria

Date Written: December 12, 2016

Abstract

This paper analyzes the impact of confidentiality of taxpayer information on the level of compliance in two countries with very different levels of citizen trust in government – the United States and Italy. Using identical laboratory experiments conducted in the two countries, we analyze the impact on tax compliance of “Full Disclosure” (e.g., release of photos of tax evaders to all subjects, along with information on the extent of their noncompliance) and of “Full Confidentiality” (e.g., no public dissemination of photos or noncompliance). Our empirical analysis applies a two-stage strategy that separates the evasion decision into its extensive (e.g., “participation”) and intensive (e.g. “amount”) margins. We find strong support for the notion that public disclosure acts as an additional deterrent to tax evaders, and that the deterrent effect is concentrated in the first stage of the two-stage model (or whether to evade or not). We also find that the deterrent effect is similar in the U.S. and in Italy, despite what appear to be different social norms of compliance in the two countries.

Keywords: tax compliance, experimental economics, confidentiality, social norma

JEL Classification: H2, H3

Suggested Citation

Alm, James and Bernasconi, Michele and Laury, Susan and Lee, Daniel and Wallace, Sally, Culture, Compliance, and Confidentiality: Taxpayer Behavior in the United States and Italy (December 12, 2016). University Ca' Foscari of Venice, Dept. of Economics Research Paper Series No. 36. Available at SSRN: https://ssrn.com/abstract=2888276 or http://dx.doi.org/10.2139/ssrn.2888276

James Alm

Tulane University ( email )

United States
5048628344 (Phone)

Michele Bernasconi

Università Ca' Foscari, Venezia - Department of Economics and SSE ( email )

Dorsoduro 3246
Venice, Veneto 30123
Italy

Susan Laury

Georgia State University - Andrew Young School of Policy Studies ( email )

P.O. Box 3992
Atlanta, GA 30302-3992
United States

Daniel Lee

Rice University - Jesse H. Jones Graduate School of Business ( email )

6100 South Main Street
P.O. Box 1892
Houston, TX 77005-1892
United States

Sally Wallace (Contact Author)

Georgia State University - Department of Economics ( email )

Department of Economics
35 Broad Street, 6th Floor
Atlanta, GA 30303-3083
United States
(404) 413-0046 (Phone)

University of Pretoria ( email )

Physical Address Economic and Management Sciences
Pretoria, Gauteng 0002
South Africa

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