European Business Schools Librarian's Group

ESSEC Working Papers,
ESSEC Research Center, ESSEC Business School

No WP1602: Discontent with taxes and the timing of taxation : experimental evidence

Radu Vranceanu (), Angela Sutan () and Delphine Dubart ()
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Radu Vranceanu: Essec Business School, Economics Department
Angela Sutan: University of Bourgogne Franche-Comté, ESC Dijon
Delphine Dubart: Essec Business School

Abstract: This paper reports results from a linear sanction cost variant of the power-to-take game, with implications for tax policies. We compare a pay-as-you-earn (PAYE) system with an ex-post taxation system in which payroll taxes are collected at the end of the fiscal year. Dissatisfaction with taxation, as proxied by the sanction in the power-to-take game, is significantly higher in an ex-post taxation system compared with the PAYE system. However, in anticipation of the higher sanction, the "tax authority" will not apply lower taxes in the former system. Communication does not decrease dissatisfaction in a significant manner, and it is not used extensively by participants.

Keywords: Power-to-take game; Experiments; Tax systems; Dissatisfaction with taxes

JEL-codes: C91; D01; H26

23 pages, March 1, 2016

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