Tax Misperception and Its Effects on Decision Making – Literature Review and Behavioral Taxpayer Response Model

TRR 266 Accounting for Transparency Working Paper Series No. 39 (2020)

WU International Taxation Research Paper Series No. 2020-13

85 Pages Posted: 23 Sep 2020 Last revised: 26 Nov 2020

See all articles by Kay Blaufus

Kay Blaufus

Leibniz Universität Hannover

Malte Chirvi

Humboldt University of Berlin - School of Business and Economics

Hans-Peter Huber

Humboldt University of Berlin - School of Business and Economics

Ralf Maiterth

Humboldt University of Berlin

Caren Sureth-Sloane

Paderborn University; Vienna University of Economics and Business

Date Written: September 1, 2020

Abstract

Previous accounting research shows that taxes affect decision making by individuals and firms. Most studies assume that agents have an accurate perception regarding their tax burden. However, there is a growing body of literature analyzing whether taxes are indeed perceived correctly. We review 127 studies on the measurement of tax misperception and its behavioral implications. The review reveals that many taxpayers have substantial tax misperceptions that lead to biased decision making. We develop a Behavioral Taxpayer Response Model on the impact of provided tax information on tax perception. Besides individual traits, characteristics of the tax information and the decision environment determine the extent of tax misperception. We discuss opportunities for future research and methodological limitations. While there is much evidence on tax misperception at the individual level, we hardly find any research at the firm level. Little is known about the real effects of managers’ tax misperception and on how tax information is strategically managed to impact stakeholders. This research gap is surprising as a large part of the accounting literature analyzes decision making and disclosure of firms. We recommend a mixed-method approach combining experiments, surveys, and archival data analyses to improve the knowledge on tax misperception and its consequences.

Keywords: Behavioral Taxation, Business Taxation, Misperception, Real Effects, Tax Perception, Tax Policy

JEL Classification: M41, H24, H25, D91

Suggested Citation

Blaufus, Kay and Chirvi, Malte and Huber, Hans-Peter and Maiterth, Ralf and Sureth-Sloane, Caren, Tax Misperception and Its Effects on Decision Making – Literature Review and Behavioral Taxpayer Response Model (September 1, 2020). TRR 266 Accounting for Transparency Working Paper Series No. 39 (2020), WU International Taxation Research Paper Series No. 2020-13, Available at SSRN: https://ssrn.com/abstract=3697982 or http://dx.doi.org/10.2139/ssrn.3697982

Kay Blaufus

Leibniz Universität Hannover ( email )

Institut für Betriebswirtschaftliche Steuerlehre
Koenigsworther Platz 1
Hannover, 30167
Germany

Malte Chirvi

Humboldt University of Berlin - School of Business and Economics ( email )

Spandauer Str. 1
Berlin, D-10099
Germany

Hans-Peter Huber

Humboldt University of Berlin - School of Business and Economics ( email )

Spandauer Str. 1
Berlin, D-10099
Germany

Ralf Maiterth

Humboldt University of Berlin ( email )

Unter den Linden 6
Berlin, AK Berlin 10099
Germany

Caren Sureth-Sloane (Contact Author)

Paderborn University ( email )

Warburger Str. 100
Paderborn, 33098
Germany

Vienna University of Economics and Business ( email )

Welthandelsplatz 1
Vienna, Wien 1020
Austria

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