Fighting Income Tax Evasion with Positive Rewards

This article provides experimental evidence regarding the influence of positive rewards on income tax evasion behavior. In particular, the authors experimentally test the impact of positive rewards in the form of individual lottery winnings for fully compliant taxpayers. Among other things, the auth...

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Bibliographic Details
Published in:Public finance review 2011-01, Vol.39 (1), p.124-149
Main Authors: Bazart, Cécile, Pickhardt, Michael
Format: Article
Language:English
Subjects:
Behavior (psychology)
Compliance
Deterrence
Economic incentives
Gender
Gender differentiation
Impact analysis
Income tax
Income taxes
Lotteries
Public goods
Rewards
Sex differences
Studies
Tax administration
Tax evasion
Taxpayers
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Summary:This article provides experimental evidence regarding the influence of positive rewards on income tax evasion behavior. In particular, the authors experimentally test the impact of positive rewards in the form of individual lottery winnings for fully compliant taxpayers. Among other things, the authors find that these positive rewards lead to a higher rate of tax compliance. Moreover, there are two gender effects. Males not only evade taxes to a much higher extent than females they also show a stronger positive response to the lottery scheme. This allows us to draw some interesting policy recommendations on the efficient use of rewards as a complement of deterrence policies for fighting tax evasion.
ISSN:1091-1421
1552-7530
DOI:10.1177/1091142110381639