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Comparing Direct and Indirect Taxation: The Influence of Framing on Tax Compliance
- Article from:
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The European Journal of Comparative Economics
- Article date:
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January 1, 2008
- Author:
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;
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Copyright informationCopyright Università Carlo Cattaneo - Biblioteca Mario Rostoni 2008. Provided by ProQuest LLC. (Hide copyright information)
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Abstract
Standard theory of the optimal mix of direct and indirect taxation implicitly assumes that compliance is not influenced by the framing of the taxes. According to our findings, this is not the case. Using an experimental approach, we examine whether framing the tax payment decision
as income tax or consumption tax influences compliance. We find that median compliance is 10.2 percentage points higher in the income tax framing. Further, we find that subjects' reaction to a change in tax rates is comparable, but reaction towards a change in detection rates is higher in the consumption tax scheme. We conclude that behavioral patterns should be taken into account when drawing conclusions ...
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