The Herd Effect In The Tax Compliance Behavior

Tax evasion is the illegal concealment behavior of taxpayers, which not only reducesgovernment tax revenue, but also has negative effects on the equity of income distribution.Hence, tax compliance is always one of the most important topics of the government. Taxevasion is common in almost every country, and the tax evasion rates are quite different fromdifferent countries. Many reasons are due to individual evasion, and this article pays attention tothe effect of bandwagon on it. We use Evolutionary Game as the main method to build a modeland design two experiments. In this article, the process of tax is considered as an infiniterepeated game, and we focus on the effect of bandwagon on tax compliance and taxpayers’behavior.There are one Evolutionary Game Model and two Tax Culture Experiments in this paper.The interaction of taxpayers is based on the hypothesis that tax investigate probability is due totax evasion rate of the group. This model explains how tax culture affects taxpayers’ behavior. Inour two experiments, we compare different culture’s effects on taxpayers’ behavior, and wenoticed that the effects of bandwagon are valid only when the difference is great enough.