Abstract. In this paper I document evidence of a reputation incentive that affects tax compliance behavior of workers across different professions. I find that on the top of the standard elements that induce tax compliance (penalty rates and audits), workers care about professional performance and reputation. Tax compliance behavior is then analyzed as a purchase of integrity. I use a novel data set of IRS compliance measures at the occupation level in the United States and compute that the average willingness to pay for Integrity is of 1.44\% of annual Adjusted Gross Income. The purchases vary across occupations depending on the relative value that Integrity has on each profession. This insight helps to explain a fraction of both the level and heterogeneity of observed tax compliance in the United States that is often not predicted by other studies in the literature.

Gary Becker's blog entry about tax evasion (with remarks on my work)