Where Do My Tax Dollars Go? Tax Morale Effects of Perceived Government Spending

157 Pages Posted: 16 Feb 2022 Last revised: 24 Feb 2022

See all articles by Matias Giaccobasso

Matias Giaccobasso

University of California, Los Angeles (UCLA) - Anderson School of Management; Universidad de la Republica - Instituto de Economía

Brad Nathan

The University of Texas at Dallas - Naveen Jindal School of Management

Ricardo Perez-Truglia

University of California, Berkeley; National Bureau of Economic Research (NBER)

Alejandro Zentner

The University of Texas at Dallas - Naveen Jindal School of Management

Date Written: February 15, 2022

Abstract

Do perceptions about how the government spends tax dollars affect the willingness to pay taxes? We designed a field experiment to test this hypothesis in a natural, high-stakes context and via revealed preferences. We measure perceptions about the share of property tax revenues that fund public schools and the share of property taxes that are redistributed to disadvantaged districts. We find that even though information on where tax dollars go is publicly available and easily accessible, taxpayers still have significant misperceptions. We use an information-provision experiment to induce exogenous shocks to these perceptions. Using administrative data on tax appeals, we measure the causal effect of perceived government spending on the willingness to pay taxes. We find that some perceptions about government spending have a significant effect on the probability of filing a tax appeal and in a manner that is consistent with the classical theory of benefit-based taxation. We discuss implications for researchers and policy makers.

Keywords: taxes, protest, public services, education, redistribution

JEL Classification: C93, H26, I22, K34, K42, Z13

Suggested Citation

Giaccobasso, Matias and Nathan, Brad and Perez-Truglia, Ricardo and Zentner, Alejandro, Where Do My Tax Dollars Go? Tax Morale Effects of Perceived Government Spending (February 15, 2022). Available at SSRN: https://ssrn.com/abstract=4035145 or http://dx.doi.org/10.2139/ssrn.4035145

Matias Giaccobasso

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

Universidad de la Republica - Instituto de Economía ( email )

Montevideo, Montevideo
Uruguay

Brad Nathan

The University of Texas at Dallas - Naveen Jindal School of Management ( email )

P.O. Box 830688
Richardson, TX 75083-0688
United States

Ricardo Perez-Truglia (Contact Author)

University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Alejandro Zentner

The University of Texas at Dallas - Naveen Jindal School of Management ( email )

P.O. Box 830688
Richardson, TX 75083-0688
United States

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