Tax rebates for truthfulness

A computer game simulation at the California Institute of Technology revealed that both taxpayer and the tax collector end up netting more, long term, under a progressive tax scheme that rewards truthfulness. The carrot - lacking under the current system - is to award partial tax rebates whenever an auditor uncovers no falsifications. Since a taxpayer would have to be audited to reap a rebate, the scheme could mean that a summons to visit the local tax office would be eagerly welcomed.

Kim C Border, an associate professor of economics at Caltech, added that the approach could be adopted by companies to discourage division managers from fudging their fiscal reports.