Universität zu Köln

Fochmann, Martin and Wolf, Nadja (2019). Framing and salience effects in tax evasion decisions - An experiment on underreporting and overdeducting. J. Econ. Psychol., 72. S. 260 - 278. AMSTERDAM: ELSEVIER SCIENCE BV. ISSN 1872-7719

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Abstract

Using different controlled and incentivized experiments, we analyze whether taxpayers are more willing to evade taxes by underreporting positive income (e.g., business or nonbusiness income) than by overdeducting negative income (e.g., deductions, credits, or losses). We robustly observe an asymmetric tax evasion behavior. Specifically, individuals are less compliant in case of positive income. This result is robust to a variation in which the after-tax payoffs from the cases with positive and negative income are offset against each other - even though offsetting reduces the asymmetric effect significantly. In an experimental environment in which the interaction of positive and negative income reporting is made very saliently and in which we consequently expect that subjects decide on both tax evasion decisions jointly, the asymmetric effect vanishes. We therefore provide evidence that (1) tax evasion behavior is asymmetrically in case of positive and negative income reporting, (2) offsetting reduces this asymmetric effect and (3) the salience of income interaction plays an important role in tax evasion decisions.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Fochmann, Martin UNSPECIFIED UNSPECIFIED UNSPECIFIED Wolf, Nadja UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-138669
DOI:	10.1016/j.joep.2019.03.005
Journal or Publication Title:	J. Econ. Psychol.
Volume:	72
Page Range:	S. 260 - 278
Date:	2019
Publisher:	ELSEVIER SCIENCE BV
Place of Publication:	AMSTERDAM
ISSN:	1872-7719
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language PROSPECT-THEORY; DETERMINANTS; DECEPTION; OPPORTUNITY; EXPERIENCE; OURSELVES; KNOWLEDGE; ECONOMICS; OMISSION; POSITION Multiple languages Economics; Psychology, Multidisciplinary Multiple languages
Refereed:	Yes
URI:	http://kups.ub.uni-koeln.de/id/eprint/13866