Neuroeconomics: taxpayers\u2019 brain and personality

Objective Paying taxes demonstrates the well-functioning of tax policies and it is necessary to finance public goods. Despite taxes are defined as the fuel of civilizations and the governments underline the crucial importance of taxation, the understanding of why people pay them remains limited. The present research aimed at detecting the cognitive responses during tax compliance experiment by considering characteristics of personality. Participants and methods We evaluated the decision-making process to pay taxes of thirty healthy participants during two different phases: individual phase, where the participant is the only one taxpayer who decides unconditionally whether paying taxes on his income; social phase, where the participant pays taxes with four other taxpayers in order to ensure public welfare. Each phases consisted of twenty rounds where participants had to decide whether paying taxes. Brain oscillations (delta, theta, alpha, beta) were monitored within the dorsolateral prefrontal cortex (DLPFC) when subjects expressed their payment intention. At the end of the experiment the taxpayers completed a questionnaire, the Italian version of the tax compliance inventory TAX-I. TAX-I assesses tax compliance and distinguishes between two forms of compliance and non-compliance: voluntary compliance (spontaneous willingness to cooperate) and enforced compliance (tax payments according to the law arise from taxpayers\u2019 concern of being audited and fined). Results Especially in social phase, it was observed higher DLPFC delta and theta activity when enforced taxpayers decided to be compliant. DLPFC was more responsive to social phase when enforced taxpayers paid taxes. In line with electroencephalographic results, behavioural data showed how enforced taxpayers decided to pay taxes especially in social phase and evade in individual phase. Conclusion In the presence of other taxpayers, enforced subjects chose an empathic and pro-social behaviour. Probably this result is driven by the preference to be social norm compliant