Nice guys finish last: are people with higher tax morale taxed more heavily?

Doerrenberg, Philipp, Duncan, Denvil, Fuest, Clemens and Peichl, Andreas (2012) Nice guys finish last: are people with higher tax morale taxed more heavily? In: 68th Annual Congress of the International Institute of Public Finance, 16/08/2012-19/08/2012, Dresden.

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Abstract

This paper is the first to provide evidence of efficient taxation of groups with heterogeneous levels of 'tax morale'. We set up an optimal income tax model where high tax morale implies a high subjective cost of evading taxes. The model predicts that 'nice guys finish last': groups with higher tax morale will be taxed more heavily, simply because taxing them is less costly. Based on unique cross-country micro data and an IV approach to rule out reverse causality, we find empirical support for this hypothesis. Income groups with high tax morale systematically face higher average and marginal tax rates.

Item Type: Conference or Workshop Item (Paper)
Keywords: tax morale, tax compliance, optimal taxation, political economy
Subject(s): Taxation
Centre: Oxford University Centre for Business Taxation
Date Deposited: 31 Oct 2012 11:26
Last Modified: 23 Oct 2015 14:07
URI: http://eureka.sbs.ox.ac.uk/id/eprint/4321

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