University of Mannheim; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute); ZEW – Leibniz Centre for European Economic Research
ifo Institute – Leibniz Institute for Economic Research at the University of Munich; Ludwig-Maximilians-University, Munich; Center for Economic Studies (CES)
ZEW – Leibniz Centre for European Economic Research; University of Mannheim - School of Economics (VWL); IZA Institute of Labor Economics; University of Essex - Institute for Social and Economic Research (ISER)
Date Written: February 2014
Abstract
This paper examines the relationship between ‘tax morale’ and tax policy. Using a unique cross‐country data set based on the World Values Survey and the World Tax Indicators, we find that income groups with high tax morale face higher average and marginal tax rates. We propose three possible mechanisms which could help to explain our results: i) an inverse elasticity argument where governments seek to minimize distortions, ii) a political economy argument where governments take voting behavior into account, and iii) an administrative costs argument where taxing high morale groups is more cost efficient.
Dörrenberg, Philipp and Duncan, Denvil and Fuest, Clemens and Peichl, Andreas, Nice Guys Finish Last: Do Honest Taxpayers Face Higher Tax Rates? (February 2014). Kyklos, Vol. 67, Issue 1, pp. 29-53, 2014, Available at SSRN: https://ssrn.com/abstract=2374199 or http://dx.doi.org/10.1111/kykl.12042
Comparative Political Economy: Fiscal Policy eJournal
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