The Effects of Tax Salience and Tax Experience on Individual Work Efforts in a Framed Field Experiment

FinanzArchiv/Public Finance Analysis, 2014, Vol. 69, No. 4, 511-542

Posted: 14 May 2014

See all articles by Martin Fochmann

Martin Fochmann

Free University of Berlin; University of Cologne

Joachim Weimann

Otto-von-Guericke-Universität Magdeburg - Institute of Economics and Business Administration; CESifo (Center for Economic Studies and Ifo Institute)

Multiple version iconThere are 2 versions of this paper

Date Written: May 12, 2014

Abstract

We present a simple model with tax biases that shows that tax perception depends on (1) the tax rate, (2) tax salience, and (3) tax experience. To test our model predictions, we first draw on the results of Fochmann et al. (2013) and show that tax misperceptions are lower with a higher tax rate. Second, we conduct a framed field experiment with 118 employees (no students) as subjects and a tax levied on the subjects’ income from working in a real-effort experiment. In four treatments employing a direct and an indirect progressive tax scale, we show that a higher tax salience and tax experience level lead to lower tax misperception. Interestingly, the tax-experience effect does not play a role in simple cases with a proportional income tax.

Keywords: tax perception, tax salience, tax experience, real-effort experiment, behavioral public economics

JEL Classification: C91, D14, H24

Suggested Citation

Fochmann, Martin and Weimann, Joachim, The Effects of Tax Salience and Tax Experience on Individual Work Efforts in a Framed Field Experiment (May 12, 2014). FinanzArchiv/Public Finance Analysis, 2014, Vol. 69, No. 4, 511-542. Available at SSRN: https://ssrn.com/abstract=2435957

Martin Fochmann (Contact Author)

Free University of Berlin ( email )

Thielallee 73
Accounting and Taxation
Berlin, 14195
Germany

University of Cologne ( email )

Albertus-Magnus-Platz
Behavioral Accounting/Taxation/Finance
Cologne, 50923
Germany

HOME PAGE: http://www.taxation.uni-koeln.de/de/team/prof-dr-martin-fochmann/

Joachim Weimann

Otto-von-Guericke-Universität Magdeburg - Institute of Economics and Business Administration ( email )

Universitaetsplatz 2
Magdeburg, 39016
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
430
PlumX Metrics