Tax evasion in a behaviorally heterogeneous society: An evolutionary analysis

•We provide an evolutionary analysis of tax evasion with heterogeneous players.•Three types of taxpayers are considered: cheaters, honest citizens and punishers.•Tax morale turns out to play a crucial role to induce high levels of tax compliance.•Honest taxpayers who are willing to costly sanction cheaters play a key role.

We focus on the tax evasion dynamics emerging from repeated interaction of three types of taxpayers: cheaters, honest citizens and punishers. By assuming that cultural evolution is driven by material payoffs only, we show that a long overlooked behavioral attitude towards taxation such as tax morale is important to dynamically induce higher levels of tax compliance within a large-scale population. The results of our evolutionary analysis reveal that the presence of taxpayers who both act honestly in the first place and are willing to costly sanction cheaters plays an important role for the long-run success of the social battle against tax evasion.