Impact of Short-Term Exogenous Shocks on Taxpayer Behavior and Tax Evasion

Abstract

The evolution of views on tax evasion following the introduction of limited rationality and social and psychological factors into the models of taxpayer behavior has increased the plausibility of the initial assumptions of the models, but it has made it difficult to use classical approaches based on the search for equilibrium states. The variety of behavioral responses of taxpayers due to the many factors that influence their choice has led to the fact that tax evasion has come to be considered as the result of nonlinear and dynamic interactions between the state and taxpayers. In such models, small short-term external influences can act as shocks, which leads to the emergence of a wide range of different long-term trends, the analysis of which within the framework of traditional approaches is difficult. In this regard, the purpose of this review study is to study the evolution of views on the behavior of taxpayers that has led to the emergence of new approaches to modeling tax evasion where the key role is assigned to the analysis of the impact of external shocks of various scales and nature. The research hypothesis is that modern approaches to the study of tax evasion problems make it necessary to consider the interaction of the state and taxpayers within the framework of the theory of non-equilibrium and nonlinear systems in which minor external influences can play the role of shocks, and the most promising direction of their study is the use of agent-based modeling tools. The results of the study confirm that the use of agent-based models is a promising approach for integrating existing approaches in the study of tax evasion processes. The proposed concept of building an agent-based model for analyzing the processes of tax evasion allows us to answer the question of how short-term exogenous shocks will affect the preferences of taxpayers, taking into account their individual characteristics and accepted behavioral patterns in society.