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Field
Abstract
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Before
This study aims to investigate the impact of automatic payment systems on tax evasion. We design a laboratory experiment where subjects play a Tax Evasion Game. Participants receive a fixed endowment and engage in an effort task under time pressure where they have the opportunity to earn income but are also simultaneously required to pay a tax, spending a fraction of the available time to successfully pay it. While evading the tax offers a higher expected payoff, it also carries the risk of a significant fine if detected. In the intervention treatment, we introduce an automatic payment option, allowing participants to commit to the tax payment before beginning the effort task. The findings will examine the impact of automatic payments on tax compliance and their potential to effectively deter tax evasion. This research contributes to our understanding of how individuals react to tax systems and the potential for automated tax collection and tax payment subscriptions to enhance revenue and tax compliance.
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After
This study aims to assess the scope for a policy to increase tax compliance in the area of car tax, focusing on the case of the Tuscany regional administration in Italy. In particular the impact of automatic payment systems on tax evasion is the specific research goal of this paper. To this end we design a laboratory experiment where subjects play a Tax Evasion Game. Participants receive a fixed endowment and engage in a real effort task under time pressure where they have the opportunity to earn cash and are also simultaneously required to pay a tax, spending a portion of the available time to pay it successfully. While evading the tax offers a higher expected payoff, it also carries the risk of a significant fine if detected. In the intervention treatment, we introduce an automatic payment option, allowing participants to commit to the tax payment before beginning the effort task. We find that reducing the non-monetary burden significantly improves tax compliance. We also elicit risk aversion and find that it does not explain the observed treatment effect.
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