Tax Evasion and State Productivity - an Experimental Study

16 Pages Posted: 19 Jan 2005

See all articles by Werner Güth

Werner Güth

Max Planck Institute for Research on Collective Goods; Luiss Guido Carli University

Matthias Sutter

Max Planck Institute for Research on Collective Goods

Sabine Straub

University of Innsbruck - Faculty of Social and Economic Sciences

Abstract

In an overlapping generations experiment with multiple families participants can support their parents directly and thereby reduce their tax burden or rely on tax-financed old-age support. State productivity is captured by the factor with which total tax revenues are multiplied to determine old-age support. This factor is systematically varied from 0.75 to 1.25. Tax payments depend on declared endowment. Tax evasion is possible, but monitored. Our results suggest that state productivity influences neither direct support of own parents nor tax evasion. The main effect is that rich endowment triggers relatively low support of own parents and high (and more frequent) tax evasion.

JEL Classification: H2, H26

Suggested Citation

Güth, Werner and Sutter, Matthias and Straub, Sabine, Tax Evasion and State Productivity - an Experimental Study. Available at SSRN: https://ssrn.com/abstract=650993

Werner Güth (Contact Author)

Max Planck Institute for Research on Collective Goods

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany

Luiss Guido Carli University ( email )

Via O. Tommasini 1
Rome, Roma 00100
Italy

Matthias Sutter

Max Planck Institute for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany

Sabine Straub

University of Innsbruck - Faculty of Social and Economic Sciences

Universitaetsstrasse 15
A-6020, Innsbruck
Austria

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