Neuroeconomics: taxpayers' brain and personality

Paying taxes demonstrates the well-functioning of State and it is necessary to finance public goods. Despite taxes are defined as the fuel of civilization and the governments underline the crucial importance of taxation, the understanding of why people pay them remains limited. The present research aimed at detecting the cognitive responses during tax compliance experiment, also by considering characteristics of personality. We evaluated the decision-making process to pay taxes of thirty healthy participants during two different phases: individual phase, where the participant is the only one taxpayer who decides unconditionally whether paying taxes on his income; social phase, where the participant pays taxes with four other taxpayers in order to ensure public welfare. Each phase consisted of twenty rounds in which participants had to decide whether paying taxes. Brain oscillations (delta, theta, alpha, beta) were monitoring within the prefrontal area when subjects expressed their payment intention. At the end of the experiment the taxpayers completed a questionnaire, the Italian version of the tax compliance inventory TAX-I. TAX-I assesses tax compliance and distinguishes between two forms of compliance and non-compliance: voluntary compliance (spontaneous willingness to cooperate, emanating from taxpayers’ moral obligation to contribute to the public welfare) and enforced compliance (tax payments according to the law arise from taxpayers’ concern of being audited and fined). Especially in social phase, it was observed higher DLPFC delta and theta activity when enforced taxpayers decided to be compliant. DLPFC was more responsive to social phase when enforced taxpayers paid taxes. Probably this result is driven by the enforced taxpayers’ preference to be social norm compliant. In line with electroencephalographic results, behavioral data showed how enforced taxpayers decided to pay taxes especially in social phase and evade in individual phase. In the presence of other taxpayers, enforced subjects chose an empathic and pro-social behavior.