Tax evasion in a transition from socialism to capitalism : The psychology of the social contract
Vihanto, Martti (30.03.2000)
JulkaisusarjaBOFIT Discussion Papers
JulkaisijaBank of Finland
Julkaisun pysyvä osoite onhttps://urn.fi/URN:NBN:fi:bof-201408072204
In a common assumption of the economics of tax evasion, extending beyond the basic Allingham-Sandmo model, the choice of a taxpayer to evade taxes depends upon the perceived fairness of the tax system.The purpose of the paper is to provide a psychological foundation for this assumption by drawing on Hayek's theory of human behavior as a process of rule following.According to the main hypothesis, taxpayers are more compliant with tax laws to which they can in principle give their full consent.A social contract as a basis of tax policy may provide a potent means to combat tax evasion particularly in transition economies that have inherited a deep mistrust of the government from their socialist past.
Published in Journal of Socio-Economics vol 32, no 2 (2003), pp. 111-125 as "Tax evasion and the psychology of the social contract"