Skipping Out On The Check: Institutional Quality, Tax Evasion, And Individual Preferences For Social Policy

61 Pages Posted: 26 Jan 2022

See all articles by Israel Marques

Israel Marques

National Research University Higher School of Economics

Date Written: January 26, 2022

Abstract

Who supports social policy in settings where institutions are weak? Existing work on social policy preferences focuses on the developed world, where governments can credibly commit to policy, tax evasion is constrained, and governments are accountable. In this paper, I relax these assumptions. I argue that weak accountability under poor institutions allow government officials to expend less effort to collect social policy contributions, decreasing expected revenues.For most, this is akin to a dead-weight cost that saps support for redistribution. For those with a comparative advantage in tax evasion, however, this allows for free-riding on the contributions of others and decreases the costs of social policy. As institutional quality declines and tax evasion becomes easier, individuals with a comparative advantage in tax evasion should therefore be more likely to support redistribution. I test this argument using public opinion data from a survey of 28,000 individuals in 28 post-communist countries.

Keywords: Shadow Economy, Preferences for Redistribution, Public Opinion, Tax Evasion, Comparative Political Economy

JEL Classification: O15, 017, H53

Suggested Citation

Marques, Israel, Skipping Out On The Check: Institutional Quality, Tax Evasion, And Individual Preferences For Social Policy (January 26, 2022). Higher School of Economics Research Paper No. WP BRP 85/PS/2022, Available at SSRN: https://ssrn.com/abstract=4018304 or http://dx.doi.org/10.2139/ssrn.4018304

Israel Marques (Contact Author)

National Research University Higher School of Economics ( email )

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

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