Tax Morale and the Legitimacy of Economic Policy
University of Heidelberg - Alfred Weber Institute for Economics; Walter Eucken Institut
It is proposed that a more accurate prediction of tax evasion activity than in the standard portfolio-choice model can be derived even for risk-neutral individuals if psychological costs are considered. Contrary to earlier models integrating psychological costs they are systematically derived by assuming a relationship between psychological costs, taxpayer satisfaction with public policy and taxes evaded. A formal concept of legitimacy of public policies is introduced and it is shown that legitimacy influences evasion activity.
Number of Pages in PDF File: 27
Keywords: Tax evasion, tax morale, economics and psychology, political legitimacy
JEL Classification: H26, Z13working papers series
Date posted: July 8, 2005
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