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Women More Likely To Fully Report Income, Researchers Find

by Jason Gorringe, Tax-News.com, London

27 December 2017


Men are significantly more likely than women to try to evade paying tax by underreporting income, researchers have found.

A new study shows men are more likely to underreport their income but voluntary compliance rates improve when they are informed about how tax revenue is used to their benefit.

The findings came from surveys of almost 5,000 people in the US, UK, Sweden, and Italy, as part of the EU-funded "Willing to Pay" project, intended to gauge self-reporting taxpayers' compliance attitudes.

Researchers conducted a laboratory experiment where groups of people in each country performed a mock clerical task, which entitled them to "earn" a small amount of money. They were then asked to self-report their "income" so the tax they had to pay could all be calculated and collected. Groups taking part in the experiment were told there was a five percent chance their earnings would be audited, and if they were caught cheating they had to pay a financial penalty of twice what they would have had to pay in tax. People who took part in the experiment completed a total of three clerical tasks and nine reporting rounds, each with different experimental conditions, such as varying tax rates and tax structure. The tax revenue was divided equally between the participants after every session.

John D'Attoma, from the University of Exeter Business School, who was part of the research team, said: "We have found robust evidence that tax compliance [rates are] greater for women than men. But men are more responsive to the incentives attached to paying taxes. Women are compliant even when they do not expect anything in return, and we had this result in every country where we ran the experiment."

In Italy, in the first round of the experiment, women on average reported 69 percent of their income, while men reported 38 percent. As they increased the amount returned in the form of a public good, this difference was reduced to 10 percent, demonstrating that men are highly sensitive to incentives. In Sweden, women reported 69 percent of their income, and men reported 37 percent. In the UK the results were 48 percent for women and 23 percent for men and in the USA 66 percent for women and 50 percent for men.

D'Attoma said: "We wanted to test both willingness to pay taxes, and willingness to contribute to public services. Our results suggest overall women are more willing to pay taxes and men respond more to the fact that they will get something, such as a public good, in return for their tax money."

The research – the role of gender in the provision of public goods through tax compliance – was published in the Journal of Behavioral and Experimental Economics.

TAGS: compliance | tax | tax compliance | audit | United Kingdom | tax rates | Italy | Sweden | United States | services

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