More bang for your buck: tax compliance in the United States and Italy

I investigate the relationship between perception of public institutions and tax compliance using a large tax compliance laboratory experiment conducted in Italy and the United States. In the first test, I conduct a simple tax compliance game to uncover that given the exact same decisions, contribut...

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Bibliographic Details
Published in:Journal of public policy 2020-03, Vol.40 (1), p.1-24
Main Author: D’Attoma, John
Format: Article
Language:English
Subjects:
Behavior
Central government
Compliance
Equilibrium
Experiments
Fire departments
Laboratories
Pension funds
Quality
Tax evasion
Taxation
Taxes
Trust
Willingness to pay
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Summary:I investigate the relationship between perception of public institutions and tax compliance using a large tax compliance laboratory experiment conducted in Italy and the United States. In the first test, I conduct a simple tax compliance game to uncover that given the exact same decisions, contributions to the public good do not differ between Italy and the United States. Second, I ask participants to pay taxes to their national government, pension fund and fire department. In these rounds, behaviours diverge with Italian participants complying significantly less than Americans. Theoretically, I provide evidence demonstrating that how individuals perceive their institutions is a crucial component of the tax compliance decision. Methodologically, I provide a unique experiment, which can help us to better explain crosscountry variation in tax compliance, by asking subjects to make country-specific tax decisions.
ISSN:0143-814X
1469-7815
DOI:10.1017/S0143814X18000302