Conventional models of taxpayer behavior largely overlook the ethical aspect of the income-reporting problem, and are generally unable to explain observed compliance rates unless risk aversion is severely exaggerated. As a correction, this paper modifies the standard model to include a moral preference parameter. Aggregate time series data on self-employed taxpayers are used to calibrate the model and impute the implicit monetary value of ethical conduct. The results suggest that tax evasion induces remorse-based disutility comparable to a tax on unreported income at rates averaging approximately 39%, though this measure of morality appears to have declined during the 1980s.
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