Uk's Tax System Analysis

The main aim of the thesis is the analysis of libertarian paternalism on the example of the UK's tax system. Another aim is to find out if the «nudge» approach is effective in the context of tax system. This thesis aims to find out if the implementation of Nudge theory courses any results and how it changes tax system from the side of government and the side of citizen. This thesis hypothesizes that implementation of libertarian paternalism approach in the UK's tax system leads to increase in tax compliance.

The reports of the UK Government and also the scientific sources are used to answer the following question: What are the impacts of implementation of the Nudge Theory into UK’s tax system?

After the «Nudge theory» appeared, the economists

This chapter includes the analysis of the model of REMM (Resourceful, Evaluating, Maximizing Man) and analysis of model of «bounded rationality». Also it describes the background of the behavioral economics and presents the main ideas in this sphere.

In the last thirty years, there were doubts about the fundamental assumptions that underlay the ‘traditional’ economic perspective. A rational agent as a fundamental model of human behavior has recently been criticized by the supporters of behavioral economics. Several concepts derived from behavioral psychology had an impact on a variety of scientific disciplines, for instance, the model of «bounded rationality» that was introduced by Herbert Simon (1982).

Since the inception as an independent field of knowledge, economic theory used the model of economic man (or homo economicus). Such model was created due to the need of studying the problem of selection and motivation in the economic activities of individuals. Herbert Simon claims that economists efforts were focused primarily on the study results of the choices in the economic sphere but the choice as the process dropped out of economic analysis: «in fact, neoclassical theory examines not the selection process but its results» (Simon

To simplify the analysis we can take a neo-classical "averaged" utility function. It does not take into account any variety of possibilities of maximizing value at a constant income or the difference between subjective desire to use available resources and the objective possibilities. Consequently, when preferences are established, the decision of the utility function is to determine the unknown results of individual choice. However, the value of theory which predicts consumer choice or other economic entity will be high, when the surrounding situation remains relatively stable and the potentials that are included in the theory are available for agent’s acceptance and processing. Apart from that there are still external and internal obstacles which the adherent of neo-clacisism do not take into