Does Tax Avoidance Trickle Down? Evidence from a Field Experiment / Justin E. Holz, Ricardo Perez-Truglia, Alejandro Zentner.

Format:

Book

Author/Creator:

Holz, Justin E.

Contributor:

Perez-Truglia, Ricardo.

Zentner, Alejandro.

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w34209.

NBER working paper series no. w34209

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2025.

Summary:

The wealthiest individuals frequently engage in tax avoidance, and public awareness of this behavior is growing. Such awareness may undermine tax compliance among the broader population, either by revealing strategies others can emulate or by shifting social norms to make avoidance seem more acceptable. We first document that individuals are less tolerant of both tax avoidance and tax evasion when carried out by the wealthiest households. We next present results from a field experiment on property tax appeals, which--like other forms of tax avoidance--is used disproportionately by the wealthiest households. Providing information about the appeal rates of the richest-1% of households increased individuals' perceptions of unfairness, but did not affect their own appeal decisions--measured via administrative records--or even their expected tax savings. Information about the prevalence of appeals among comparable households also had no effect. By contrast, information about the expected financial gains from appealing had a significant effect on appeal choices. In sum, while the public condemns tax avoidance by the wealthiest households, we find no sign that such behavior encourages similar actions among the broader population.

Notes:

September 2025.

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