Legitimate Authorities and Rational Taxpayers: An Investigation of Voluntary Compliance and Method Effects in a Survey Experiment of Income Tax Evasion
Forthcoming in Rationality and Society
96 Pages Posted: 8 Feb 2017 Last revised: 16 Jan 2018
Date Written: January 1, 2018
In order to collect the revenue necessary to fund public goods, states are often required to both deter tax evasion and encourage voluntary tax compliance on the part of their citizens. While most prior research has focused on explaining tax evasion with standard economic model parameters, there has been growing interest in identifying the determinants of voluntary compliance. We build on this work by proposing a legitimacy-based model of tax compliance that accounts for why some citizens voluntarily comply with their tax obligations and others do not. To test our model, we develop and administer a survey experiment of income tax evasion to a large random sample of undergraduate students. We also investigate the extent to which design-based method effects bias our results, such as order effects, complexity effects, and missing information effects. Substantively, results strongly support the standard economic model of deterrence and weakly support the legitimacy-based model of voluntary compliance. Methodologically, we find no evidence of order effects, weak evidence of complexity effects, and suggestive evidence of missing information effects.
Keywords: Tax Evasion, Legitimacy, Method Effects, Survey Experiment, Multilevel Model
JEL Classification: C90, C99, H26
Suggested Citation: Suggested Citation