Tax Evasion and State Productivity - an Experimental Study

16 Pages Posted: 19 Jan 2005

See all articles by Werner Guth

Werner Guth

Max Planck Institute of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Matthias Sutter

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods; University of Cologne - Department of Economics

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. Metroeconomica, Vol. 56, No. 1, pp. 85-100, February 2005. Available at SSRN: https://ssrn.com/abstract=650993

Werner Güth (Contact Author)

Max Planck Institute of Economics ( email )

Kahlaische Strasse 10
D-07745 Jena, 07745
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Matthias Sutter

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods ( email )

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

University of Cologne - Department of Economics

Cologne, 50923
Germany

Sabine Straub

University of Innsbruck - Faculty of Social and Economic Sciences

Universitaetsstrasse 15
A-6020, Innsbruck
Austria

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