This paper explores whether the usage of tax revenues affects tax compliance behavior. I design a laboratory compliance experiment in which subjects make tax reporting decisions and are randomly assigned to four treatment groups that differ only in how the generated tax revenue is spent. The results indicate that compliance levels depend on the usage of tax revenues. The paper contributes to the literature on the determinants of tax compliance, it benefits the methodological side of compliance lab experiments, and it adds to the behavioral literature on pro-social behavior and giving.
Dörrenberg, Philipp (2015), Does the use of tax revenue matter for tax compliance behavior?, Economics Letters 128(March), 30-34.