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

See all articles by Blaine Robbins

Blaine Robbins

New York University Abu Dhabi

Edgar Kiser

University of Washington

Date Written: January 1, 2018

Abstract

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

Robbins, Blaine and Kiser, Edgar, Legitimate Authorities and Rational Taxpayers: An Investigation of Voluntary Compliance and Method Effects in a Survey Experiment of Income Tax Evasion (January 1, 2018). Forthcoming in Rationality and Society. Available at SSRN: https://ssrn.com/abstract=2913071 or http://dx.doi.org/10.2139/ssrn.2913071

Blaine Robbins (Contact Author)

New York University Abu Dhabi ( email )

PO Box 129188
Abu Dhabi
United Arab Emirates

Edgar Kiser

University of Washington ( email )

Seattle, WA 98195
United States

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