Tax Compliance Through MABS: The Case of Indirect Taxes
Multi-agent systems can be used in social simulation to get a deeper understanding of complex phenomena, in such a way that predictions can be provided and tested, and policies can be designed in a solid individually grounded manner. Our aim is explore th
- PDF / 174,048 Bytes
- 13 Pages / 430 x 660 pts Page_size
- 61 Downloads / 192 Views
Abstract. Multi-agent systems can be used in social simulation to get a deeper understanding of complex phenomena, in such a way that predictions can be provided and tested, and policies can be designed in a solid individually grounded manner. Our aim is explore this link between micro-level motivations leading to and being influenced by macro-level outcomes in an economic setting where to study the complex issue of tax evasion. While it is obvious why there is a benefit for people who evade taxes, it is less obvious why people would pay any taxes at all, given the small probability of being caught, and the small penalties involved. Our research program uses exploratory simulation and progressively deepening models of agents and of simulations to study the reasons behind tax evasion. We have unveiled some relatively simple social mechanisms that can explain the compliance numbers observed in real economies. We claim that simulation with multiple agents provides a strong methodological tool with which to support the design of public policies.
1
Introduction
In most societies, tax evasion is a serious economical problem that only recently has started to receive scientific attention [18,1]. Tax evasion creates in the individual person an idea of social unfairness that can only invite more evasion. Especially in developing countries, the perception of tax evasion, together with the notion of widespread corruption leads to social disturbance, and undermines both individual and group motivation towards better social mechanisms and fairer societies. People have the generalised idea that it is individually compensating to evade taxes, as penalties are low, and the probability of being caught rather small. And in fact this idea is supported by the models that most theories of tax evasion endorse. In such models, tax payers are represented by agents whose utilitarian rationality would inevitably lead to free-riding and evasion. However, the real picture is quite different. Real people pay far more than utilitarian theories predict. For instance, in the USA, although the fine value (or rate) can be neglected, and even though less than 2% of households were audited, the Internal Revenue Service (IRS) estimates that 91.7% of all income that should have been reported was in fact reported (numbers from 1988-1992-1995, cited from [2]). In fact, the whole scientific endeavour dealing with tax evasion is known as “tax compliance.” J. Neves, M. Santos, and J. Machado (Eds.): EPIA 2007, LNAI 4874, pp. 605–617, 2007. c Springer-Verlag Berlin Heidelberg 2007
606
L. Antunes, J. Balsa, and H. Coelho
Our claim is that multi-agent systems (MAS) provide a more effective approach to the study of tax compliance. The main reason behind this belief is that we can consider individual agents endowed with appropriate motivational models to provide an empirically rooted account of their decisions, whereas in traditional economical models the focus is on general laws that can be used to describe the behaviour of any agent. People are different from
Data Loading...
