Tax Morale and the Taming of Leviathan

Jan Schnellenbach

Constitutional Political Economy, 2006, vol. 17, issue 2, 117-132

Abstract: An explanation for tax morale based upon a simple model of psychological costs that depend on the perceived legitimacy of public policies is introduced. It is shown that empirically observed low levels of tax evasion can be explained even for a risk-neutral taxpayer with such a model. In a discussion of aggregate tax revenue, it is argued that tax revenue as a function of tax rates may differ fundamentally from the notorious Laffer curve. It is then necessary to look at the interaction of formal and informal institutions to predict the nominal tax rates chosen by a revenue maximizer. Copyright Springer Science+Business Media, LLC 2006

Keywords: Tax evasion; Tax morale; Cognitive dissonance; Informal institutions; H26; Z13 (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (20)

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Persistent link: https://EconPapers.repec.org/RePEc:kap:copoec:v:17:y:2006:i:2:p:117-132

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DOI: 10.1007/s10602-006-0001-y

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