FISCAL INEQUITY AND TAX EVASION: AN EXPERIMENTAL APPROACH

Abstract

This paper seeks to examine the relationship between fiscal inequity and tax evasion using an experimental approach. In the experiment, human subjects are faced with hypothetical tax evasion decisions and their behavior is observed. On the basis of socio-psychological research on inequity, it is hypothesized that the amount of taxes evaded will increase for victims of fiscal inequity but decrease for beneficiaries of fiscal inequity. The results of the experiment support this hypothesis.