The use of agent-based modelling to investigate tax compliance

Abstract

Agent-based modelling can be used to investigate the behavioural and social aspects of tax compliance. We illustrate the approach with two models. The …rst model emphasises the role of occupational choice in tax compliance, and explores the e¤ect of non-compliance on risk-taking and income distribution. The modelling of the compliance decision is discussed with an emphasis on decision-making under uncertainty and social interaction. We then add to the model a social network which governs the transmission of information on attitudes and beliefs, and investigate alternative audit strategies. A strategy of auditing a …xed number of taxpayers from each occupation dominates alternative strategies (including random and focussed strategies) in the sense of …rst-order stochastic dominance.

National culture as a moderator between social norms, religiosity, and tax evasion: Meta-analysis study

“…This condition calls for social norms, which are of the social aspect of psychology, which determine whether or not a person will obey. This aspect will influence the behavior of his family, group, and community (Hashimzade et al, 2014(Hashimzade et al, , 2015. Consistently with this trend, some researchers begin to pay more intensive attention to their social and environmental conditions as an essential determinant of tax compliance (Abraham et al, 2017;Hokamp, 2014;Sayidah & Assagaf, 2019).…”

Tax Evasion Indices and Profiles

“…The use of agent-based tax evasion models can be traced back to Mittone and Patelli (2000). Further contributions have come from Davis, Hecht, and Perkins (2003), Bloomquist (2006), Korobow, Johnson, and Axtell (2007), Zaklan, Westerhoff, and Stauffer (2009), Hokamp and Pickhardt 2010 For instance, the "extent of tax evasion" (Hokamp 2014) that is a measure of underreporting; "voluntary tax rates" (Hokamp and Pickhardt 2010), "effective tax rates" (Hashimzade et al 2015), and "mean reporting compliance rates" (Bloomquist 2011a) that are measures of compliance. 4.…”

“… 1. The use of agent-based tax evasion models can be traced back to Mittone and Patelli (2000). Further contributions have come from Davis, Hecht, and Perkins (2003), Bloomquist (2006), Korobow, Johnson, and Axtell (2007), Zaklan, Westerhoff, and Stauffer (2009), Hokamp and Pickhardt (2010), Bloomquist (2011b), Bloomquist and Koehler (2015), and Hashimzade et al (2015). A collection of recent contributions can be found in the special issues “Behavioral Dynamics of Tax Evasion” in Journal of Economic Psychology : Andrei, Comer, and Koehler (2014), Hashimzade et al (2014), Hokamp (2014), Pickhardt and Seibold (2014), and Pellizzari and Rizzi (2014). …”

“… 3. The literature of the field used many different measures related to tax evasion. For instance, the “extent of tax evasion” (Hokamp 2014) that is a measure of underreporting; “voluntary tax rates” (Hokamp and Pickhardt 2010), “effective tax rates” (Hashimzade et al 2015), and “mean reporting compliance rates” (Bloomquist 2011a) that are measures of compliance. …”

Measuring the Invisible: An Overview of and Outlook for Tax Non-Compliance Estimates and Measurement Methods for Switzerland

“…So the focus is often on the dynamics resulting from variation of the interaction or the enforcement process (Pickhardt and Prinz, 2014). For an illustration of how agent-based models can be used to analyse tax compliance aspects, see, for example, Hashimzade et al (2015) or see Bloomquist (2006) for an example comparing three agentbased income tax non-compliance models. Further explanations of agent-based models and why they are especially apt to model the dynamics of tax non-compliance can be found in Pickhardt and Prinz (2014).…”