The TaxSim agent-based simulation solution provides an opportunity to examine tax averting behavior. It is possible to model a complex social economic system, where interactions and interferences of different participants influence the whole system to a different degree. Attributes and reactions in the model try to recreate the natural surroundings as close as possible. This is feasible only to some extent naturally; therefore recognized experts, exceptional care and the newest accomplishments of social sciences and economics were employed during development of the model.

Participants

Participants of the model are: employer, employee and the state. While employers and employees participate as agents, the state (only one exists) is indirectly present in the model. Agents make decisions during the simulation. They are helped by their own information and experiences as well as that of their environment that circulate information through the agents’ social networks.

The state is present in the model in different ways: as tax revenue collector, and as service provider. Through these roles, it has a major influence on the public morale. An employee may resort to health-, civil- and other services that are paid for from tax revenues. As for the employer, this list can extend further on. The agents’ opinion towards the state is influenced by the quality and efficiency of services; this opinion, in turn, influences their social responsibility and tax morale.

In the model, employers are concerned with producing and selling their products. To accomplish it, they require employees, who manufacture the products. The number of manufactured items is proportional to the people employed. In order to work, employees need to receive allowance packages. Such a package may be assembled in one of the following 23 ways:

The table indicates which packages are regarded legal, illegal (hidden) or mixed from the view point of the state. Depending on the package, its gross and net cost varies: the difference between gross and net diminished going from legal to illegal packages (1-23).

Employers can sell their products on a market where demand changes constantly and always the cheapest good is bought. The price of a product equals to the gross income of the employee who produces it.

Simulation

A simulation is built up of consequent rounds where each round represents a month. Each month, participants evaluate their position and make decisions regarding their future activities. Also, at given odds, events may happen that play a role in the participants’ decision making process. Such an event can be a controlling at the employer, where labor relations are investigated.  Alternatively,  employers or employees may purchase services from the state, and the quality of the service also influences the participant.

Behavior of the participants can be fine tuned and individualized to a great extent. A virtually infinite number of scenarios can be formulated via the individual behaviors, and simulating them allows us to observe the consequences of different behaviors manifesting in various parameter values of the model. Typical questions regard the consequences of different state policies or employer behaviors. The most interesting output parameters perhaps are the employment rate, and the share of legal/hidden/mixed contracts.

Visualization

Output charts can automatically be generated during the simulation. A wide variety of graphical representations are available in the simulation tool allowing the experimenter to instantly display the results.

Publications

Szabó, Attila, Gulyás, László and Tóth, István János (2008), "TAXSIM Agent Based Tax Evasion Simulator", 5th European Social Simulation Association Conference (ESSA 2008). 

Szabó, Attila, Gulyás, László, Tóth, István János (2009), "Az adócsalás elterjedtségének változása - becslések a TAXSIM ágensalapú adócsalás-szimulátor segítségével", book chapter (in hungarian) Semjén András, Tóth, István János (eds.) Rejtett Gazdaság pp. 65-83, ISBN 978-963-9796-58-4

Szabó, Attila, Gulyás, László and Tóth, István János (2009), "Impacts of Network Topology on Tax Evasion in a Complex Artificial Social System", RGS 2009 Conference

Szabó, Attila, Gulyás, László and Tóth, István János (2009), "Sensitivity Analysis of a Tax Evasion Model Applying Automated Design of Experiments", Progress in Artificial Intelligence, Lecture Notes in Artificial Intelligence, 5816. 

Szabó, Attila, Gulyás, László and Tóth, István János (2010), "Simulating Tax Evasion with Utilitarian Agents and Social Feedback", International Journal of Agent Technologies and Systems (IJATS), 2, 1: 16-30, IGI Global. 

Szabó, Attila, Gulyás, László and Tóth, István János (2011), "An Agent-Based Tax Evasion Model Calibrated Using Survey Data", SHADOW 2011 Conference

Software Download

Three scenarios are available as demo. After downloading and uncompressing the zip file, just double click one of the TaxSim_xxx.jar files. If you are using an operating system where double clicks are less powerful, you can start the demos from the command line as: `java -jar demofile.jar`. The three TaxSim_xxx.jar files contain the following demos.

Government Improvement

In the starting situation, hidden contracts are more beneficial to the players than legal ones. After the government improves the quality of its service to the citizens and companies, the situation changes, and legal contracts prevail.

Tax Discounts for Multi-National Companies

The detrimental effect of giving tax-discounts to multinational companies is displayed by this demo. To keep up with the discriminated companies, the rest of the economy is forced to utilize hidden contracts.

Demo videos