More bang for your buck: tax compliance in the United States and Italy

This is the author accepted manuscript. The final version is available from Cambridge University Press via the DOI in this record.I investigate the relationship between perception of public institutions and tax com- pliance using a large tax compliance laboratory experiment conducted in Italy and the United States. In the rst test, I conduct a simple tax compliance game to uncover that given the exact same decisions, contributions to the public good do not di er between Italy and the United States. Secondly, I ask participants to pay taxes to their national government, pension fund, and re department. In these rounds, behaviors diverge with Italian participants complying signi cantly less than Americans. Theoretically, I provide evidence demonstrating that how individuals perceive their institutions is a crucial component of the tax compliance decision. Methodologically, I provide a unique experiment, which can help us to better explain cross-country variation in tax compliance, by asking subjects to make country-specific tax decisions.Funds for this research were provided by the European Research Council (Grant Agreement No. 295675 )