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Tax Morale and the Legitimacy of Economic Policy

27 Pages Posted: 8 Jul 2005  

Jan Schnellenbach

BTU Cottbus-Senftenberg, Institute for Economics, Chair for Microeconomics; Walter Eucken Institute

Date Written: February 2005

Abstract

It is proposed that a more accurate prediction of tax evasion activity than in the standard portfolio-choice model can be derived even for risk-neutral individuals if psychological costs are considered. Contrary to earlier models integrating psychological costs they are systematically derived by assuming a relationship between psychological costs, taxpayer satisfaction with public policy and taxes evaded. A formal concept of legitimacy of public policies is introduced and it is shown that legitimacy influences evasion activity.

Keywords: Tax evasion, tax morale, economics and psychology, political legitimacy

JEL Classification: H26, Z13

Suggested Citation

Schnellenbach, Jan, Tax Morale and the Legitimacy of Economic Policy (February 2005). Available at SSRN: https://ssrn.com/abstract=753884 or http://dx.doi.org/10.2139/ssrn.753884

Jan Schnellenbach (Contact Author)

BTU Cottbus-Senftenberg, Institute for Economics, Chair for Microeconomics ( email )

Erich-Weinert-Str. 1
Cottbus, 03046
Germany

HOME PAGE: http://https://www.b-tu.de/fg-vwl-mikro/team/prof-dr-jan-schnellenbach

Walter Eucken Institute ( email )

Goethestr. 10
Freiburg, 79100
Germany

HOME PAGE: http://www.eucken.de

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