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Happy taxation: increasing tax compliance through positive rewards?

Published online by Cambridge University Press:  15 October 2015

Hilke Brockmann ,
Philipp Genschel  and
Laura Seelkopf
Hilke Brockmann
Affiliation:
School of Humanities and Social Sciences, Jacobs University Bremen, Germany E-mail: h.brockmann@jacobs-university.de
Philipp Genschel
Affiliation:
Robert Schuman Centre for Advanced Studies, European University Institute, Italy E-mail: philipp.genschel@eui.eu
Laura Seelkopf
Affiliation:
Research Center on Inequality and Social Policy, University of Bremen, Germany E-mail: laura.seelkopf@uni-bremen.de
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Abstract

Can governments increase tax compliance by rewarding honest taxpayers? We conducted a controlled laboratory experiment comparing tax compliance under a “deterrence” baseline with tax compliance under two “reward” treatments: a “donation” treatment giving taxpayers a say in the spending purposes of their payments and a “lucky” treatment giving taxpayers the (highly unlikely) chance of winning a lottery. The reward treatments significantly affected tax behaviour but not in a straightforward manner. Although female participants altered their behaviour as expected and complied somewhat more, men strongly reacted in the opposite manner: they evaded a much higher percentage of taxes than under the baseline. Apparently, there is no one-size-fits-all approach to boost tax compliance.

Keywords

donationgenderlaboratory experimentlotterytax evasion
Type
Research Article
Information
Journal of Public Policy , Volume 36 , Issue 3 , September 2016 , pp. 381 - 406
Copyright
© Cambridge University Press, 2015 

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