Taxation and the Veil of Ignorance--A Real Effort Experiment on the Laffer Curve

Matthias Sutter and Hannelore Weck-Hannemann

Public Choice, 2003, vol. 115, issue 1-2, 217-40

Abstract: In this paper we address the role of the veil of ignorance on work incentives and tax rates in a two-person real effort experiment. We find that effort levels decrease with a rise in tax rates. Tax revenues peak at intermediate tax rates of 50 percent to 65 percent, supporting the existence of a Laffer curve in taxation. Tax authorities do not exploit their power to tax in full, which is compatible both with revenue maximizing but also fair behavior. Behind the veil of ignorance, subjects care more for efficiency and restrict the power to tax more than in case their position (taxpayer or tax authority) is fixed in advance. Copyright 2003 by Kluwer Academic Publishers

Date: 2003
References: Add references at CitEc
Citations: View citations in EconPapers (71)

Downloads: (external link)
http://journals.kluweronline.com/issn/0048-5829/contents link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:pubcho:v:115:y:2003:i:1-2:p:217-40

Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/11127/PS2

Access Statistics for this article

Public Choice is currently edited by WIlliam F. Shughart II

More articles in Public Choice from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().