The Last Refuge of a Scoundrel? Patriotism and Tax Compliance

Kai Konrad and Salmai Qari

No 7215, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study the effects of patriotism on tax compliance. If individuals feel a (random) patriotic warm glow from honest tax compliance, this has implications for optimal auditing and tax compliance. A higher expected warm glow reduces the government's optimal audit probability and yields higher tax compliance. Also, individuals with higher warm glow are less likely to evade taxes. This prediction is confirmed empirically by a multivariate analysis on the individual level while controlling for several other potentially confounding factors. The findings survive a variety of robustness checks, including an instrumental variables estimation to tackle the possible endogeneity of patriotism. On the aggregate level, we provide evidence for a negative correlation between average patriotic warm glow and the size of the shadow economy across several countries.

Keywords: Patriotism; Tax evasion; Warm glow (search for similar items in EconPapers)
JEL-codes: H26 K42 (search for similar items in EconPapers)
Date: 2009-03
New Economics Papers: this item is included in nep-pbe
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Citations: View citations in EconPapers (9)

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Related works:
Journal Article: The Last Refuge of a Scoundrel? Patriotism and Tax Compliance (2012)
Working Paper: The Last Refuge of a Scoundrel? Patriotism and Tax Compliance (2009)
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