Special Issue "Empirical Tax Research and Application"

A special issue of Games (ISSN 2073-4336).

Deadline for manuscript submissions: closed (31 August 2019).

Special Issue Editor

Dr. Katharina Gangl
E-Mail Website
Guest Editor
Assistant Professor of Economic Psychology, Department of Economic and Social Psychology, University of Goettingen, Germany
Interests: tax behavior; institutional management of cooperation; trust; ethical behavior; ethical business cultures; group decision-making

Special Issue Information

Dear Colleagues,

Empirical tax research is on the rise. Tax administrations recognize the advantages of designing their strategies and interventions on the basis of empirically tested theoretical models, and count on evidence-based approaches. However, important current developments such as aggressive tax avoidance by international corporations or the digitalisation and automation of the tax administration are still under-researched. In addition, relatively few theoretical and empirical guidelines exist for tax administrations regarding tools and procedures for interacting with taxpayers, and applied knowledge about methods for evaluating new policy instruments is scarce. Additionally, academic research often relies on the results of laboratory experiments which lack ecological validity and reduce the complexity of real life to hardly acceptable simplicity. The acceptance and applicability of results could be increased with the use of laboratory tax games that mimic real-world situations more appropriately and allow the assessment of tax avoidance and evasion, cooperative behaviour with the tax administration, etc. Theories and methods should go beyond the known approaches of economics and psychology and instead adopt ideas from other disciplines, such as informatics, political sciences, anthropology, and philosophy. The present Special Issue aims to collect theoretical and empirical contributions that open up new research avenues and contribute to the increase of the arsenal of research methods in tax research. Theoretical contributions that review classical methods and develop novel empirical methods of studying the behaviour of taxpayers and authorities are invited. Additionally, contributions addressing topics of current practical relevance are welcome.

Dr. Katharina Gangl
Guest Editor

Manuscript Submission Information

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Keywords

  • tax behavior
  • tax experiments
  • tax theory
  • tax law
  • tax methods
  • agent-based models of tax compliance
  • field-experiments on tax compliance
  • laboratory experiments on tax compliance
  • tax avoidance
  • tax administration
  • tax participation
  • digitalization
  • automatization

Published Papers (6 papers)

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Research

Open AccessArticle
Gaming the System: An Investigation of Small Business Owners’ Attitudes to Tax Avoidance, Tax Planning, and Tax Evasion
Games 2019, 10(4), 46; https://doi.org/10.3390/g10040046 - 08 Nov 2019
Abstract
To a large extent, the body of research that looks at individuals’ compliance with the law focuses on the dichotomy between compliance as rule-following and noncompliance as rule-breaking. However, a fascinating case of noncompliance is that where individuals selectively follow existing rules in [...] Read more.
To a large extent, the body of research that looks at individuals’ compliance with the law focuses on the dichotomy between compliance as rule-following and noncompliance as rule-breaking. However, a fascinating case of noncompliance is that where individuals selectively follow existing rules in order to circumvent the legal principle, this behaviour has been termed ‘creative compliance.’ In the current study, we investigated the psychological underpinnings of ‘creative compliance’ by assessing the attitudes of tax avoidance (significant minimisation of tax liability perceived to be legal) and tax evasion (illegal tax minimisation) of 330 owners of small businesses. We found that tax avoidance and tax evasion were perceived as qualitatively distinct by respondents and that they were predicted by different factors. While both tax avoidance and tax evasion were associated with weak personal norms to contribute to the tax system, tax avoidance was associated with a perception that the tax system is unfair, and that tax law has ‘loopholes’ that can be exploited, while tax evasion was predicted by the perception that evasion is a trivial crime. Overall, we provide insight into the under-investigated behaviour of ‘creative compliance’ and propose future research directions. Full article
(This article belongs to the Special Issue Empirical Tax Research and Application)
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Open AccessArticle
Response Times and Tax Compliance
Games 2019, 10(4), 45; https://doi.org/10.3390/g10040045 - 04 Nov 2019
Abstract
Inspired by the work of Rubinstein, this study revisits data from a previous lab experiment to explore the relation between response times and tax compliance and understand the potential non-linearity between them by classifying decisions and individuals into compliance types. We find that [...] Read more.
Inspired by the work of Rubinstein, this study revisits data from a previous lab experiment to explore the relation between response times and tax compliance and understand the potential non-linearity between them by classifying decisions and individuals into compliance types. We find that individuals’ decision response time is related to their compliance decisions. Full-non compliant individuals (those who did not declare any earned income) have shorter response times than those who fully or partially complied. Full-compliant individuals also tend to declare income faster than partially compliant subjects. Such results are robust throughout time and when controlling for contextual characteristics of experimental design. We find non-linearity via an inverted U-shape function that reaches its maximum declaration time around a compliance rate of 60%, even after controlling for contextual experimental design factors. In addition, we observe a non-linear relation between cognitive skills, response time, and tax compliance. Participants with relatively high cognitive skills and very low or very high tax compliance level have low response times, while subjects with relatively lower cognitive skills tend to report higher decision times for higher compliance levels. Full article
(This article belongs to the Special Issue Empirical Tax Research and Application)
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Open AccessArticle
Can Behavioral “Nudges” Improve Compliance? The Case of Colombia Social Protection Contributions
Games 2019, 10(4), 43; https://doi.org/10.3390/g10040043 - 29 Oct 2019
Abstract
The Government of Colombia imposes a variety of taxes that must be paid by individual wage earners, called in their entirety “social protection contributions”. Since 2007 individual payments have been collected using an on-line mechanism. In order to improve compliance, the Government used [...] Read more.
The Government of Colombia imposes a variety of taxes that must be paid by individual wage earners, called in their entirety “social protection contributions”. Since 2007 individual payments have been collected using an on-line mechanism. In order to improve compliance, the Government used a controlled field experiment in which various “pop-up messages” were sent to individuals when making their on-line payments, as behavioral “nudges”. We examine the impact of these nudges on individual reporting behavior. We find mixed evidence that these messages increased compliance rates relative to a control group that received a so-called “neutral” message. However, we also demonstrate that the use as the control group of individuals receiving a so-called “neutral” message creates considerable bias; that is, the receipt of any message of any type clearly influences behavior. Instead, we show that the appropriate control group should be individuals who receive no message at all. When this control group is used, we find that self-employed individuals generally increase their contributions; individuals who are making declarations on behalf of all employees in their company are less likely to respond to messages in a systematic way. Full article
(This article belongs to the Special Issue Empirical Tax Research and Application)
Open AccessArticle
Taxation with Mobile High-Income Agents: Experimental Evidence on Tax Compliance and Equity Perceptions
Games 2019, 10(4), 42; https://doi.org/10.3390/g10040042 - 11 Oct 2019
Abstract
In a laboratory experiment on tax compliance, we model a situation in which high-income taxpayers can leave a tax system that finances a public good. We compare low-income taxpayers’ compliance decisions and equity perceptions across treatments in which they are informed or not [...] Read more.
In a laboratory experiment on tax compliance, we model a situation in which high-income taxpayers can leave a tax system that finances a public good. We compare low-income taxpayers’ compliance decisions and equity perceptions across treatments in which they are informed or not informed about the mobility option of high-income taxpayers. This allows us to test if low-income taxpayers regard the mobility option as a rationale for implementing a regressive tax schedule. To investigate if a potential ‘justification effect’ of the mobility option depends on the causes of income heterogeneity, we also varied whether income was allocated based on relative performance in a prior ability task or at random. Interestingly, although the performance-based allocation itself was judged to be fairer, we observed higher compliance under the random allocation mechanism. However, compliance and equity perceptions did not significantly differ by the information treatment variation, regardless of the source of income inequality. The results indicate that the threat of losing high-income taxpayers’ contributions does not lead low-income taxpayers to view the regressive tax schedule more favorably. This suggests that taking the differential mobility options as given and altering tax schedules accordingly may not be perceived as an adequate policy response. Full article
(This article belongs to the Special Issue Empirical Tax Research and Application)
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Open AccessArticle
On the Collective Choice among Models of Social Protection: An Experimental Study
Games 2019, 10(4), 41; https://doi.org/10.3390/g10040041 - 11 Oct 2019
Abstract
A real-effort experiment is conducted in order to detect preferences for one out of three different models of the Welfare State characterized by different tax-and-transfer schemes. We reproduce a small society in the lab where: Subjects are grouped in three stylized classes (the [...] Read more.
A real-effort experiment is conducted in order to detect preferences for one out of three different models of the Welfare State characterized by different tax-and-transfer schemes. We reproduce a small society in the lab where: Subjects are grouped in three stylized classes (the rich, the middle class and the poor) on the basis of their performance in a real-effort activity; income and risk are assigned according to the class; tax revenue is spent to refund unlucky people and to provide a public good. Experimental subjects must choose (both under and without a veil of ignorance concerning their position in the society created in the lab) among (a) a baseline proportional scheme, where the State is neutral with respect to risk heterogeneity; (b) an actuarially fair scheme where low ability and low earnings subjects bear full individual responsibility for risk exposure and (c) a progressive scheme where mutual risk insurance spreads risk across all subjects such that low ability and low earnings individuals are compensated. Our most relevant finding is that preference is motivated less by a justice principle and more by self-interested considerations on the expectations surrounding one’s own position in the society. Full article
(This article belongs to the Special Issue Empirical Tax Research and Application)
Open AccessArticle
Learning (Not) to Evade Taxes
Games 2019, 10(4), 38; https://doi.org/10.3390/g10040038 - 29 Sep 2019
Abstract
In this paper, lab experiments on tax compliance were theoretically investigated with dynamic and stochastic methods. It is well known from experimental games that learning allows a better understanding of participants’ behavior. However, it has not been explicitly applied so far in the [...] Read more.
In this paper, lab experiments on tax compliance were theoretically investigated with dynamic and stochastic methods. It is well known from experimental games that learning allows a better understanding of participants’ behavior. However, it has not been explicitly applied so far in the theoretical analysis of tax compliance experiments. In this paper, it was shown that two decision-making processes may be distinguished: a discrete process in which all options are regarded and an all-or-nothing process in which either the respective tax is paid fully or not at all. The corresponding variant of the learning model was either a stochastic or a deterministic one, with the stochastic version as the more general model. In the additional empirical part of the paper, it was shown that tax payments decline in trend over the rounds of the considered experiment. This negative trend was interpreted as a learning effect, in accordance with the stochastic version of the theoretical model. However, the alternative interpretation that the observed behavior was driven by a tiring effect cannot be completely excluded. Full article
(This article belongs to the Special Issue Empirical Tax Research and Application)
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