Taxpayer behavior in response to taxation:comment and new experimental evidence

Journal of Accounting and Public Policy 18 (1999) 165-177

M.A. Sillamaa

Abstract

This experiment replicates an experiment previously published in C.W. Swenson [Taxpayer behavior in response to taxation, an experimental analysis, Journal of Accounting and Public Policy 7 (1) (1988) 1±28] on how people adjust their work effort in response to a linear tax where the amount taken away by the marginal tax rate is returned to the individual as a lump-sum grant, i.e., where the net tax revenue is zero.

The prediction is that work effort should decrease as the marginal tax rate rises. Swenson obtained a result partially in contradiction to this theory. The experiment in this paper introduces some changes to his experimental design, and in contrast, supports the theory. © 1999 Elsevier Science Inc. All rights reserved.

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