A taxpayer may voluntarily decide to pay taxes or make an explicit decision to avoid paying the full share. A single person's contribution does not really make much difference in the overall contributions to public goods. Therefore, not paying one's taxes is advantageous as the amount of public goods and one's participation in them remains almost unchanged, while at the same time one saves on taxes. If few taxpayers evade taxes, public goods will not disappear or be reduced significantly; however, if a considerable number of taxpayers evade, the provision of public goods is not guaranteed and ultimately everyone will suffer from a suboptimal choice.

The tax system represents a social dilemma with individual interests being in conflict with collective interests: two or more people are interdependent on obtaining outcomes; if few people try to maximise their own outcomes, defection is the rational choice. However, if a large number or all people maximise their outcome, the effect is that, sooner or later, everyone gets less than if they had chosen to cooperate (Dawes, 1980; Messick and Brewer, 1983; Mérö, 1996; Stroebe and Frey, 1982; Van Lange et al. 1992). In other words, the tax system represents an n-player social dilemma, often referred to as tragedy of the commons (Hardin, 1968), with defection as each taxpayer's rational strategy, independent of how other taxpayers decide to behave. If single taxpayers choose to pay their full share of taxes, they will be worse off because they support the free-riding, parasitic others (Torgler, 2003d).