Over the second half of the 20th century, Greek governments failed to tax business income in line with the country’s level of economic development. This paper uses the “slippery slope” model of tax compliance to explain why the reform of income and corporate taxation in the late 1950s met strong resistance in the business sector. We argue that the negative legacy of interwar reforms, the lack of sustained and credible investment in trust building in coincidence with the postwar reforms, and the intensification of coercive threats in tax enforcement led to an antagonistic tax climate and a degradation of enforced and voluntary compliance. Our qualitative analysis based on original primary sources shows that the arguments publicly voiced by entrepreneurs and their organizations reflected their persistent perception of tax power as unfair, arbitrary and extractive. Using aggregate tax returns data, our quantitative analysis finds evidence of systematic and increasing income underreporting both by unincorporated and incorporated businesses. This vicious circle of non-cooperation and mutual distrust explains why governments got trapped into a persistent low tax capacity equilibrium that still casts a shadow on the Greek economy.

The paper examines the legacy of pre-colonial centralization on tax compliance norms of citizens in contemporary Uganda. Using a regression discontinuity analysis on neighboring ethnic homelands with different levels of pre-colonial centralization, we find that pre-colonial centralization is correlated with stronger norm for tax compliance. The result is explained by the legacy of location-specific capacity of centralized states in upholding authority and a strong social cohesion exhibited through higher interpersonal trust but not through trust in public institutions.

Identifying taxpayers who engage in noncompliant behaviour is crucial for tax authorities to determine appropriate taxation schemes. However, because taxpayers have an incentive to conceal their true income, it is difficult for tax authorities to uncover such behaviour (social desirability bias). Our study mitigates the bias in responses to sensitive questions by employing the list experiment technique, which allows us to identify the characteristics of taxpayers who engage in tax evasion. Using a dataset obtained from a tax office in Jakarta, Indonesia, we conducted a computer-assisted telephone interviewing survey in 2019. Our results revealed that 13% of the taxpayers, old, male, corporate employees, and members of a certain ethnic group had reported lower income than their true income on their tax returns. These findings suggest that our research design can be a useful tool for understanding tax evasion and for developing effective taxation schemes that promote tax compliance.

What are the effects of foreign aid on the perceived legitimacy of recipient states? Different donors adhere to different rules, principles, and operating procedures. The authors theorize that variation in these aid regimes may generate variation in the effects of aid on state legitimacy. To test their theory, they compare aid from the United States to aid from China, its most prominent geopolitical rival. Their research design combines within-country analysis of original surveys, survey experiments, and behavioral games in Liberia with cross-country analysis of existing administrative and Afrobarometer data from six African countries. They exploit multiple proxies for state legitimacy, but focus in particular on tax compliance and morale. Contrary to expectations, the authors find little evidence to suggest that exposure to aid diminishes the legitimacy of African states. If anything, the opposite appears to be true. Their results are consistent across multiple settings, multiple levels of analysis, and multiple measurement and identification strategies, and are unlikely to be artifacts of sample selection, statistical power, or the strength or weakness of particular experimental treatments. The authors conclude that the effects of aid on state legitimacy at the microlevel are largely benign.

I investigate the relationship between perception of public institutions and tax compliance using a large tax compliance laboratory experiment conducted in Italy and the United States. In the first test, I conduct a simple tax compliance game to uncover that given the exact same decisions, contributions to the public good do not differ between Italy and the United States. Second, I ask participants to pay taxes to their national government, pension fund and fire department. In these rounds, behaviours diverge with Italian participants complying significantly less than Americans. Theoretically, I provide evidence demonstrating that how individuals perceive their institutions is a crucial component of the tax compliance decision. Methodologically, I provide a unique experiment, which can help us to better explain crosscountry variation in tax compliance, by asking subjects to make country-specific tax decisions.

This article looks at whether political ideology matters for enforcement of the nation’s tax laws. An analysis of the Internal Revenue Service (IRS) budget and personnel suggests that the party affiliation of the President makes no difference to the overall level of IRS resources. However, there are significant increases in the number of IRS employees devoted to criminal investigation and revenue collection under Democratic administrations. Audits of tax returns filed by corporations, individuals and estates are also significantly more likely under Democratic administrations. The body of evidence points in the direction that while Congress has a greater influence in determining the overall level of resources available to the IRS, the President has a more pronounced influence on the allocation of those resources.