65 Pages Posted: 12 Dec 2003
In this piece, prepared for a symposium on the empirical study of taxation, we consider the intriguing possibility that taxes generate disutility for taxpayers in excess of the dollar amounts involved. While most people dislike paying taxes, the extent to which a phenomenon of "tax aversion" exists is empirically unknown, as are the causes and constituent elements of any such aversion. Investigation of these questions could provide important lessons for tax policy. If people are averse to taxes above and beyond the financial losses the taxes represent, they would tend to spend more time and money on tax avoidance than economic analysis would predict, creating additional deadweight losses for society. Even where avoidance is not pursued at elevated levels, tax aversion would increase the disutility associated with the payment of the tax, generating psychic costs and potentially impacting compliance levels. Hence, a better understanding of the magnitude and components of tax aversion could advance comprehension of taxpayer behavior and spur useful innovation in tax design.
Towards those ends, we survey and mine existing bodies of empirical work for the light they might shed on tax aversion, and identify avenues for further study. We give particular attention to the growing body of experimental games used to model the provision of public goods. Anthropological studies of public goods provision and the effective use of norms of reciprocity in group contexts can help to parse and import richer meaning into the findings obtained in these controlled experimental settings. We close by discussing some possible ways of importing greater transparency and voice into the taxpaying interface, to test the hypothesis that these features can serve as proxies for some of the components present in successful reciprocal interactions.
Suggested Citation: Suggested Citation
Fennell, Christopher C. and Fennell, Lee Anne, Fear and Greed in Tax Policy: A Qualitative Research Agenda. Washington University Journal of Law and Policy, Vol. 13, p. 75, 2003. Available at SSRN: https://ssrn.com/abstract=474360 or http://dx.doi.org/10.2139/ssrn.474360