Progressive Taxation and Tax Morale

Philipp Doerrenberg and Andreas Peichl

No 5378, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: As the link between tax compliance and tax morale is found to be robust, finding the determinants of tax morale can help to understand and fight tax evasion. In this paper we analyze the effect of progressive taxation on tax morale in a cross-country approach – which has not been investigated before. Our theoretical analysis leads to two testable predictions. First, an individual’s tax morale is higher, the more progressive the tax schedule is. Second, the impact of tax progressivity on tax morale is declining in income. In our empirical analysis, we make use of a unique dataset of tax progressivity measures and follow most of the tax morale literature by employing the World Values Survey to measure tax morale. Controlling for a wide range of variables, we confirm both hypotheses in our empirical analysis.

Keywords: taxation; progressivity; tax compliance; redistribution; tax morale (search for similar items in EconPapers)
JEL-codes: D31 D7 H24 H26 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2010-12
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Published - revised version published in: Public Choice, 2013, 155 (3), 293-316

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Related works:
Journal Article: Progressive taxation and tax morale (2013)
Working Paper: Progressive Taxation and Tax Morale (2010)
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