Working Paper: NBER ID: w25575
Authors: Timothy Besley; Anders Jensen; Torsten Persson
Abstract: This paper studies individual and social motives in tax evasion. We build a simple dynamic model that incorporates these motives and their interaction. The social motives underpin the role of norms and is the source of the dynamics that we study. Our empirical analysis exploits the adoption in 1990 of a poll tax to fund local government in the UK, which led to widespread evasion. The evidence is consistent with the model's main predictions on the dynamics of evasion.
Keywords: Tax Evasion; Social Norms; Intrinsic Motivation; Poll Tax; UK
JEL Codes: H26; H3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Perceived unfairness of the poll tax (H26) | Reduced intrinsic motivation to comply (H26) |
| Reduced intrinsic motivation to comply (H26) | Increase in tax evasion (H26) |
| Introduction of the poll tax in 1990 (H29) | Dynamics of tax evasion consistent with model predictions (H26) |
| Introduction of the poll tax in 1990 (H29) | Increase in tax evasion rates (H26) |
| Higher initial evasion rates during the poll tax period (H26) | Slower return to pre-poll tax evasion levels (H26) |