The current experimental study examined the effect of monetary rewards on tax compliance. Eighty-six participants were randomly assigned to one control and two reward conditions (low vs. high reward). Overall, tax compliance was not affected by the rewards. However, a change in compliance strategies was observed. It seems that rewards provoked an all-or-nothing behavior. Whereas in the reward conditions, participants were either completely honest or evaded all of their income, in the control condition, the amount of evasion varied more strongly. Furthermore, audited compliant taxpayers who are rewarded evaded less in the following period compared with audited compliant taxpayers who experienced no rewards.
Allingham, Michael, and Agnar Sandmo.1972. Income tax evasion: A theoretical analysis . Journal of Public Economics1:323-38.
2.
Alm, James, Betty R. Jackson, and Michael McKee .1992a. Deterrence and beyond: Toward a kinder, gentler IRS. In Why people pay taxes: Tax compliance and enforcement, ed. Joel Slemrod, 311-29. Ann Arbor, MI: University of Michigan Press.
3.
---. 1992b. Estimating the determinants of taxpayer compliance with experimental-data. National Tax Journal45:107-14.
4.
Andreoni, James, Brian Erard, and Jonathan S. Feinstein .1998. Tax compliance. Journal of Economic Literature36:818-60.
5.
Bazart, Cécile, and Michael Pickhardt .2010. Fighting income tax evasion with positive rewards: Experimental evidence. LAMETA, University of Montpellier Working Papers No. 09-01. http://ideas.repec.org/p/lam/wpaper/09-01.html (accessed August 3, 2009).
6.
Braithwaite, Valerie.2003a. Dancing with tax authorities: Motivational postures and non-compliant actions. In Taxing democracy. Understanding tax avoidance and tax evasion, ed. Valerie Braithwaite , 15-39. Aldershot, UK: Ashgate.
7.
---. 2003b. A new approach to tax compliance. In Taxing democracy. Understanding tax avoidance and tax evasion, ed. Valerie Braithwaite, 1-11. Aldershot, UK: Ashgate.
8.
Collins, Julie H.1992. Commentary on Alm, Jackson, & McKee ‘‘Deterrence and Beyond: Toward a Kinder, Gentler, IRS.’’ In Why people pay taxes: Tax compliance and enforcement, ed. Joel Slemrod, 330-2. Ann Arbor, MI: The University of Michigan Press.
9.
Elffers, Henk.1999. Tax evasion. In The Elgar companion to consumer research and economic psychology, ed. Peter E. Earl and Simon Kemp, 556-60. Cheltenham , UK: Edward Elgar.
10.
Estes, William K.1944. An experimental study of punishment. Psychological Monographs57 (Whole 263).
11.
Falkinger, Josef, and Herbert Walther .1991. Rewards versus penalties: On a new policy against tax evasion. Public Finance Quarterly19:67-79.
12.
Feld, Lars P., and Bruno. S. Frey .2007. Tax compliance as the result of a psychological tax contract: The role of incentives and responsive regulation . Law & Policy29:102-20.
13.
Feld, Lars P., Bruno S. Frey, and Benno Torgler.2006. Rewarding honest taxpayers? Evidence on the impact of rewards from field experiments. CREMA, Center of Research in Economics, Management and the Arts, Working paper No. 2006 - 16. http://www.crema-research.ch/papers/2006-16.pdf (accessed September 08, 2007).
14.
Fjeldstad, Odd-Helge, and Joseph Semboja.2001. Why people pay taxes: The case of the development levy in Tanzania. World Development29:2059-74.
15.
Gouldner, Alvin W.1960. The norm of reciprocity: A preliminary statement. American Sociological Review25:161-78.
16.
Guala, Francesco, and Luigi Mittone.2005. Experiments in economics: External validity and the robustness of phenomena. Journal of Economic Methodology12:495-515.
17.
Hasseldine, John.1999. Gender differences in tax compliance. Asia-Pacific Journal of Taxation3:73-89.
18.
Hasseldine, John, and Zhuhong Li.1999. More tax evasion research required in new millennium. Crime, Law and Social Change31:91-104.
19.
Jackson, Betty, and Valerie Milliron .1986. Tax compliance research: Findings, problems, prospects. Journal of Accounting Literature5:125-65.
20.
Kastlunger, Barbara, Erich Kirchler, Luigi Mittone, and Julia Pitters.2009. Sequences of audits, tax compliance, and taxpaying strategies. Journal of Economic Psychology30:405-18.
21.
Kirchler, Erich, Erik Hoelzl, and Ingrid Wahl.2008. Enforced versus voluntary tax compliance: The ‘‘slippery slope’’ framework. Journal of Economic Psychology29:210-225.
22.
Kirchler, Erich.2007. The economic psychology of tax behaviour. Cambridge, UK: Cambridge University Press.
23.
Kirchler, Erich, Stephan Muehlbacher, Barbara Kastlunger, and Ingrid Wahl. In press. Why pay taxes? A review of compliance decisions. In Developing alternative frameworks for explaining tax compliance, ed. James Alm, Jorge Martinez-Vazquez , and Benno Torgler.New York, NY: Routlegde.
24.
Mittone, Luigi.2006. Dynamic behaviour in tax evasion: An experimental approach . The Journal of Socio-Economics35:813-35.
25.
Muehlbacher, Stephan, Erik Hölzl, and Erich Kirchler.2007. Steuerhinterziehung und die Berücksichtigung des Einkommens in der Strafbemessung. Wirtschaftspsychologie9:116-21.
26.
Pommerehne, Werner, and Hannelore Weck-Hannemann.1996. Tax rates, tax administration and income tax evasion in Switzerland. Public Choice88:161-70.
27.
Schneider, Friedrich, and Dominik Enste.2002. The shadow economy: An international survey. Cambridge, UK: Cambridge University Press.
28.
Schwartz, Richard D., and Sonya Orleans.1967. On legal sanctions. University of Chicago Law Review34:274-300.
29.
Skinner, Burrhus F.1938. The behavior of organisms. New York, NY: Appleton-Century Crofts.
30.
---. 1965. Science and human behavior. New York, NY: The Free Press, The Macmillan Company.
31.
Slemrod, Joel.1992. Why people pay taxes: Introduction. In Why people pay taxes: Tax compliance and enforcement, ed. Joel Slemrod, 1-8. Ann Arbor, MI: The University of Michigan Press.
32.
Smith, Kent W.1992. Reciprocity and fairness: Positive incentives for tax compliance. In Why people pay taxes: Tax compliance and enforcement , ed. Joel Slemrod, 223-57. Ann Arbor, MI: University of Michigan Press.
33.
Smith, Kent, W., and Loretta Stalans, J.1991. Encouraging tax compliance with positive incentives: A conceptual framework and research directions. Law & Policy13:35-53.
34.
Srinivasan, Thirukodikaval, N.1973. Tax evasion: A model. Journal of Public Economics2:339-46.
35.
Strümpel, Burkhard.1969. The contribution of survey research to public finance . In Quantitative analysis in public finance, ed. Alan T. Peacock, 14-32. New York, NY: Praeger Publishers.
36.
Torgler, Benno.2003. Beyond punishment: A tax compliance experiment with taxpayers in Costa Rica. Revista de Analisis Economico18: 27-56.
