Income Tax Evasion and the Tax Schedule: Some Experimental Results

Abstract

A report of an experiment which replicates the income tax assessment procedure and is designed to test two predictions of tax evasion theory: that every individual will attempt some evasion if the expected gains are positive, and that a change in the marginal tax rate (average rate constant) will not influence the amount of evasion attempted. Both predictions are strongly rejected by the results, though a positive influence of true after-tax income on evasion, which is consistent with the basic model, is confirmed.

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