Paying Your Fair Share: Perceived Fairness and Tax Compliance
We provide evidence on the role of perceived fairness for tax compliance: households are more willing to pay taxes when they believe others are contributing their fair share. We conducted a natural field experiment in the context of U.S. property taxes. Through an information-disclosure experiment, we exogenously shifted households’ perceptions of the average tax rate paid by others. We find that a higher perceived average tax rate increases perceptions of tax fairness and reduces the likelihood of filing a tax appeal. We measure the role of fairness with a money metric: for each additional $1 paid by the average household, a taxpayer is willing to contribute an extra $0.43. Using a complementary survey experiment, we show that some households are willing to tolerate lower tax rates for others in special circumstances, such as disabilities or older age.
Related
More from NBER
In addition to working papers, the NBER disseminates affiliates’ latest findings through a range of free periodicals — the NBER Reporter, the NBER Digest, the Bulletin on Retirement and Disability, the Bulletin on Health, and the Bulletin on Entrepreneurship — as well as online conference reports, video lectures, and interviews.
