Paradigms in Paying: A Cross-Cultural Examination of Behavioral Tax Response

Abstract

Cultural binaries such as individualism and collectivism have been shown to influence individuals’ thought processes in a variety of domains. Theories of each type of culture make general predictions about how these culturally-based mindsets may influence economic decisions, but few studies have sought to ope-rationalize these paradigms in a behavioral measure. Using TurkPrime samples from both the US (individualistic society) and India (collectivistic), the present research shows that the cultural norms present in each country have behavioral manifestations as measured by differing levels of willingness to continue working under a re-distributive income tax. We show that members of a collectivistic society are significantly less opposed to re-distributive taxes in general, and more willing to continue working when such a tax is imposed on their income. The study attributes this difference to collectivistic societies viewing an accumulation of wealth as a larger responsibility to give back to society than individualistic societies. The experimental findings are then further corroborated by archival analysis of questionnaire responses from each country found in the World Values Survey.

Keywords: cross-cultural, collectivism, individualism, tax, wealth, redistribution

JEL Classification: F68, H71