“Willing to Pay?” An Experimental Analysis of Tax Compliance in Britain and Italy

Zhang, N., Andrighetto, G., Ottone, S., Ponzano, F., Steinmo, S. (2016). “Willing to Pay?” An Experimental Analysis of Tax Compliance in Britain and Italy, PLoS One 11(2).

This lab experiment involved over 500 participants across multiple locations in Italy and the UK, including Oxford, and focused on examining citizens’ willingness to contribute to public goods via taxes while holding institutions constant. The experiment consisted in asking the participants to declare this income for taxation purposes under different scenarios freely choosing the amount of their income—from 0% to 100%—in each round, with the knowledge that they would pay taxes on only the reported portion of their incomes. The outcome presented a surprising cross-national difference in compliance rates: on average, British participants reported a smaller share of their total income in every round as compared to Italians.  Overall, the findings cast doubt upon “culturalist” arguments that would attribute cross-country differences in tax compliance to the lack of morality amongst southern European taxpayers.