Sustainable Consumer Tax Evasion Theory under Information Inattention

Round 1

Reviewer 1 Report

This article studies the renewed interest surrounding sustainable public finance and the topic of tax evasion as well as the new theory of information inattention. This study is interesting, however, there are some issues need to explain more clearly, such as following. 1. Please identify the weakness of the previous studies. 2. Please provide the related work especially the theory of information inattention. 3. Why do you employ the theory of information inattention? 4. Please identify the contribution and future work of this study. This article should update the references.

Author Response

 

Dear Referee

First of all, thanks a lot for the good feedback and suggestions. We have included all your recommendations in the paper. We confirm that our paper has improved in-line with your feedback.

Note, all major changes in the revised paper are highlighted in red, so that you can see the changes immediately.

In the following, I briefly comment on your five issues:

1. First, in the Introduction section we newly explain the ultimate goal and research question as well as the relationship to the present literature (include the focus on sustainability!). Moreover, in the literature Review section, we clearly describe the literature and explain the flaws and gaps of the existing literature. At each point we say what we do differently. In addition, you recommend to explain to you (the reader) what’s new in our paper. In short, there are three points: First, we integrate information inattention in a tax evasion model. This was never done before. Second, we analyze the impact of policy parameters in this model and obtain novel policy conclusions in regard to sustainable public finances. Third, the model allows a new perspective about the design of sustainable tax schemes and the role of public debt sustainability. Thus, our analysis detects and highlights the novel role of inattention. We integrated these issues – which are already in the paper(!) – even stronger in order to follow your recommendations.

2. In the literature review and at other key parts in the paper, we cite and discuss all seminal papers of the theory of information inattention, tax evasion and public finance sustainability. If you are missing a seminal paper in this field, please let me know and tell us. Thank you.
3. In the introduction and model section, we have motivated the utilization of the approach in more detail. Again, we integrate information inattention in our model because it is a major behavioural notion which is not integrated in this literature so far. The seminal work by Gabaix (2019) shows that ‘inattention’ is absent in standard microeconomic models, particularly in tax theory. This is the first paper integrating this notion into the special field of ‘tax evasion theory’.
4. In the introduction section, we have one full paragraph explaining the contribution of this article including the general implications of our research and the future research opportunities based on our new approach. Furthermore, we additionally included more of those points in the model discussion.
5. Finally, we have updated our literature in general, including recent publications from 2020. We are convinced that our paper includes all seminal papers in the fields as well as all recent papers related to our research topic.

Reviewer 2 Report

The renewed paper interest in sustainable public finance and tax evasion is a very relevant and topical subject. With the generation of different en new information and insights arise than can also take practice futher. A good and cleas reserach paper.

 

Author Response

Dear Referee

First of all, thanks a lot for the good feedback. We did some minor adjustments due to some comments from two other referees. Note, all changes in the revised paper are highlighted in red.

Reviewer 3 Report

I do not see any connection between the topic and the theme of the journal.
It is not entirely known how the author understands the word "sustainability", it has not been explained.
Instead of using only complicated mathematical formulas, the author should also describe it in a text that is friendly to the reader.
The method is not clear, the description is unacceptable.

Author Response

Dear Referee

First of all, thanks a lot for the good feedback and suggestions. We have included your recommendations in our paper. We confirm that our paper has improved in-line with your feedback.

Note, all major changes in the revised paper are highlighted in red, so that you can see the changes immediately.

In the following, I briefly comment on your issues:

1. First of all, our paper is clearly related to the long-standing literature of the sustainability of public finances. You probably know the seminal papers by Bohn (1995). In the following many economists have worked on the topic of sustainable finances and sustainable tax policy. We have integrated one new paragraph, according to your feedback, in order to explain/demonstrate the relationship to the sustainability literature in this field of research. Thus, we explain the relationship to a long-standing literature on the sustainability of public finance. Moreover, we newly highlight at several points in the article the impact and relationship to the notion of sustainability in more detail.
2. In the literature Review, we clearly describe the literature and cite all seminal papers. If you miss a seminal paper, please let me know. Moreover, we include a definition of sustainability, despite it is well-known and follows the seminal work in that field of literature (Bohn 1995 among others).

3. Each proposition is explained in words, so that apart from the rigorous proof a reader can follow and read the verbal interpretation/intuition as well as the implications of the results.
4. Under the Model Section, we clearly describe the model, all assumptions and the method. Everything in our paper is guaranteed to be replicable – as it is in good science. Indeed, you can re-calculate every formula step-by-step. Therefore, we have attached a very detailed appendix where you can follow and re-calculate the model. If you see any need for an improved of the model section or appendix, please give us a detailed feedback on which line and/or page you see a problem. Please tell us what you recommend in order to enhance the model presentation. Thank you.

Round 2

Reviewer 1 Report

The revised manuscript has addressed my concern.

Reviewer 3 Report

Dear Author,
thank you for taking into account all the suggestions, you did a very good job.
Congratulations!