Tax compliance through MABS: The case of indirect taxes

Abstract

Multi-agent systems can be used in social simulation to get a deeper understanding of complex phenomena, in such a way that predictions can be provided and tested, and policies can be designed in a solid individually grounded manner. Our aim is explore this link between micro-level motivations leading to and being influenced by macro-level outcomes in an economic setting where to study the complex issue of tax evasion. While it is obvious why there is a benefit for people who evade taxes, it is less obvious why people would pay any taxes at all, given the small probability of being caught, and the small penalties involved. Our research program uses exploratory simulation and progressively deepening models of agents and of simulations to study the reasons behind tax evasion. We have unveiled some relatively simple social mechanisms that can explain the compliance numbers observed in real economies. We claim that simulation with multiple agents provides a strong methodological tool with which to support the design of public policies. © Springer-Verlag Berlin Heidelberg 2007.