Examining the determinants of tax compliance by experimental data: a case of Korea

We examine the determinants of tax compliance using experimental data for Korea. Our empirical results can be summarized as follows. First, taxpayers have the same degree of compliance regardless of their income levels, which can be interpreted as an evidence of the utility function with constant relative risk aversion. Second, both the tax audit and the penalty rate are important deterrences from tax evasion, although the penalty rate is more effective. Third, taxpayers have a strong tendency for a free-ride, which means less compliance for financing their government. Fourth, tax education is one of the effective tools to induce taxpayers to comply more. (C) 2003 Society for Policy Modeling. Published by Elsevier Inc. All rights reserved.