The Korean Economic Review
Procedural Fairness and Taxpayers’ Response: Evidence from an Experiment
Byung-hill Jun (Hankuk University of Foreign Studies), Myeonghwan Cho (Sungkyunkwan University), Myung-Ho Park (Korea Institute of Public Finance)Year 2015Vol. 31No. 2
We perform an experiment to investigate how the fairness of decision making proceduresaffects taxpayers’ income reporting behavior. According to our experiment, individuals tendto report more income, and thus evade less tax when majority voting determines a tax ratestructure than when a dictatorship determines a tax rate structure. We also find that such apositive effect of majority voting occurs mainly through individuals dissatisfied with thecurrent tax rate structure. These findings hint at a channel through which proceduralfairness works to improve tax compliance.