Whistleblowing and tax evasion: Experimental evidence

Abstract

Abstract In a tax compliance experiment we manipulate various dimensions to isolate the effects of whistleblowing: whether incomes are homogeneous or heterogeneous; whether whistleblowing is permitted or not; and whether subjects have complete or incomplete information about others’ tax evasion. Under complete information, we find that whistleblowing has a strong impact on compliance, reducing the proportion of concealed income and increasing the precision of the auditing procedure. Moreover, the probability of being whistled increases with evasion and rich subjects react to whistleblowing more than poor subjects do. Introducing incomplete information reduces the deterrent effect of whistleblowing, but not among the richest taxpayers.