Tax Behavior: Compliance and Evasion

Abstract

Tax behavior, both compliance and evasion, are important for tax-payers and the tax authority. Paying taxes is not popular for most people. Traditionally, taxpayers and the tax authority play the " cops and robbers " power game of distrust, policing, and control. A mod-ern approach is the " clients and services " approach with more trust between parties. The tax authority may provide pre-filled-out tax dec-larations and other services to taxpayers. Equity, fairness, and justice are important drivers of trust and tax compliance. This chapter can be read in combination with chapters 12 (confidence and trust), 13 (loss aversion and reference points), and 14 (risk preference).