Tax Morale and Compliance Behavior: First Evidence on a Causal Link
23 Pages Posted: 10 May 2010
Recent literature on tax evasion emphasizes the importance of moral considerations to explain compliance behavior. As a consequence scholars aim to identify factors that shape this so-called tax morale. However, the causal link between tax morale and actual compliance behavior is not established yet. Exploiting exogenous variation in tax morale - given by the inherited part of tax morale of American-born from their ancestors' country of origin - our instrumental variable analysis provides first evidence on a causal effect of tax morale on the size of the underground production.
Keywords: tax morale, tax evasion, tax compliance, underground production
JEL Classification: A13, O17, H26, Z13, C81
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