Income tax progression – Truly Illegitimate?

Fischer, Oliver and Fischer, Lorenz (2011) Income tax progression – Truly Illegitimate? Wirtschaftspsychologie, 13 (1). pp. 13-28.

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Representative studies show that the majority of the population in Germany perceive the current tax system as lacking legitimacy and would prefer an increase in the redistribution of income. Tax on high incomes is considered too low, whereas tax on low incomes is considered too high. A closer look at the actual contribution these two income groups make to total tax revenues shows that this perceived illegitimacy is based on false assumptions. A detailed analysis shows that this gap can not be primarily attributed to envy, but is mainly the result of an insufficient understanding of the tax system. It is argued that this lack of knowledge is the result of the low attractiveness of the subject on the one hand, and of its high complexity on the other. For the state, improving the popultation’s understanding of taxation is a dilemma. While increased knowledge of the results of taxation would strengthen the relationship between citizens and the state, it might also result in negative emotion and an increase in tax avoidance, and, potentially, evasion.

Item Type: Article
Keywords: Tax psychology; Legitimacy; Tax equity; Perception of taxes; Progressive tax; Envy
Subject(s): Organisational behaviour
Centre: Faculty of Organisational Behaviour
Date Deposited: 25 Feb 2012 17:04
Last Modified: 23 Oct 2015 14:07

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