Official vs. Unofficial Info: How It Shapes Tax Compliance Behavior
Tax compliance behavior is influenced by both official and unofficial information about past tax evasion rates. A study found that tax compliance tends to persist over time, with past evaders more likely to evade again and compliant individuals more likely to comply again. When peers communicate past evasion behavior, both evaders and compliant individuals are influenced to behave similarly. In countries with low tax evasion, official information can reinforce compliance, but in high evasion countries, it can worsen evasion. The impact of official information is stronger when peer effects are present.