Title: Prior Audits and Taxpayer Compliance: Experimental Evidence on the Effect of Earned Versus Endowed Income
Abstract:ABSTRACT: This paper provides evidence from a laboratory experiment designed to investigate the effect of prior audits on taxpayer compliance. The experiment provides evidence that when taxable income...ABSTRACT: This paper provides evidence from a laboratory experiment designed to investigate the effect of prior audits on taxpayer compliance. The experiment provides evidence that when taxable income requires comparatively little time and effort to generate (endowed income), taxpayer compliance increases following an audit. In contrast, when taxable income requires comparatively large amounts of time and effort to generate (earned income), compliance decreases following an audit. The results from this study suggest that taxpayer compliance is influenced by whether one has been audited in the past, but that the specific effect of prior audits depends on the amount of time and effort required to generate one’s income. This information should be of interest to policy makers who are concerned about improving taxpayer compliance. In addition, these results add to the body of evidence indicating that taxpayer decisions appear to be influenced by whether taxable income is earned or endowed. Finally, the results suggest that mixed findings documented in prior research on the role of prior audits can be attributed in part to systematic differences in whether taxable income was earned or endowed.Read More
Publication Year: 2010
Publication Date: 2010-09-01
Language: en
Type: article
Indexed In: ['crossref']
Access and Citation
Cited By Count: 23
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