Taxes and Benefits: Two Distinct Options to Cheat on the State?

35 Pages Posted: 16 Jun 2008

See all articles by Martin Halla

Martin Halla

Johannes Kepler University Linz - Department of Economics; IZA Institute of Labor Economics

Friedrich Schneider

Johannes Kepler University Linz - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Institute for the Study of Labor (IZA)

Abstract

While there is an extensive literature on tax evasion a further aspect of cheating on the state, namely benefit fraud, has gained relatively modest attention in the economic literature. This paper seeks to fill this gap. We explore differences between benefit fraud and tax evasion due to differing social norms. We define the concepts of benefit morale and tax morale as the motivation to abstain from cheating on the state via these two offenses. Our multilevel analysis, based on a large micro data set of respondents from 29 OECD member countries, shows that benefit morale and tax morale have different determinants at an individual-level and respond differently to fiscal policy measures.

Keywords: tax, subsidies, tax evasion, benefit fraud, welfare fraud, tax morale, benefit morale, social norms, multilevel analysis

JEL Classification: H20, H26, H44, A13

Suggested Citation

Halla, Martin and Schneider, Friedrich G., Taxes and Benefits: Two Distinct Options to Cheat on the State?. IZA Discussion Paper No. 3536, Available at SSRN: https://ssrn.com/abstract=1145915 or http://dx.doi.org/10.1111/j.0042-7092.2007.00700.x

Martin Halla (Contact Author)

Johannes Kepler University Linz - Department of Economics ( email )

Altenbergerstrasse 69
A-4040 Linz, 4040
Austria

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Friedrich G. Schneider

Johannes Kepler University Linz - Department of Economics ( email )

Altenbergerstrasse 69
A-4040 Linz, 4040
Austria
+43 732 2468 8210 (Phone)
+43 732 2468 8208 (Fax)

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

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Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

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