Abstract

http://ssrn.com/abstract=1619268
 


 



Fiscal Illusion and Fiscal Obfuscation: An Empirical Study of Tax Perception in Sweden


Tino Sanandaji


affiliation not provided to SSRN

Björn Wallace


Stockholm School of Economics - Department of Economics

June 2, 2010

IFN Working Paper No. 837

Abstract:     
In this paper we present survey evidence suggesting that there exists a sizeable fiscal illusion amongst the general public in Sweden. Respondents in a nation-wide and representative survey systematically underestimate the share of an ordinary worker’s income that is transferred to the public sector. Furthermore, we make a theoretical distinction between tax illusion and fiscal obfuscation, a proposed novel type of fiscal illusion. It has previously been assumed that fiscal illusion derives from a fragmentized tax system with many small, and largely invisible, taxes which tend to be ignored or underestimated by the tax payers. We hypothesize that this systematic bias could in addition emanate from misapprehensions of the real incidence of a tax. Evidence is presented that this could apply even when taxes are few and large, contrary to the tax complexity hypothesis. When this misperception derives from seemingly deliberate tax design and tax labeling, as appears to be the case with the payroll taxes in Sweden, we call it fiscal obfuscation.

Number of Pages in PDF File: 13

Keywords: Fiscal Illusion, Fiscal Obfuscation, Tax Illusion, Tax Labeling, Tax Structure, Personal Income Taxation

JEL Classification: H11, H22, H24, H30

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Date posted: June 4, 2010  

Suggested Citation

Sanandaji, Tino and Wallace, Björn, Fiscal Illusion and Fiscal Obfuscation: An Empirical Study of Tax Perception in Sweden (June 2, 2010). IFN Working Paper No. 837. Available at SSRN: http://ssrn.com/abstract=1619268 or http://dx.doi.org/10.2139/ssrn.1619268

Contact Information

Tino Sanandaji (Contact Author)
affiliation not provided to SSRN ( email )
Björn Wallace
Stockholm School of Economics - Department of Economics ( email )
P.O. Box 6501
Sveavagen 65
S-113 83 Stockholm
Sweden
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