Investigating behavioral economics in tax evasion decision making phenomenon: a tax crime scenario approach

Abstract

Purpose: Most tax policies are based on how taxpayers make decisions based on classical economic models. However, studies show that conventional decision-making models, which are designed without socio-psychological foundations and based only on economic components, can not explain the developments and the exact way decision-makers work. Considering that the issue of preventing tax evasion by taxpayers is very important and necessary, in this study, using mathematical modeling and scenario making tools to calculate tax crimes, the theory of behavioral economics and the theory of expected desirability have been compared.Methodology: In this research, using mathematical modeling tools and a questionnaire to calculate tax crimes, the theory of behavioral economics and the theory of expected desirability have been compared.Findings: The results indicate that the amount of crimes calculated in the theory of behavioral economics is closer to crimes in the real world. Therefore, the obtained results are a good justification for choosing the theory of perspective instead of the theory of expected utility, and by adding the parameter of tax ethics, the amount of tax penalty in both theories is reduced.Originality/Value: Since a healthy economy is an economy that is mostly based on taxes and has tried to cover government expenditures through taxes. To achieve this, the country's tax system must be reformed.

Keywords

• behavioral economics
• tax evasion
• tax ethics