Nice Guys Finish Last: Are People with Higher Tax Morale Taxed More Heavily?

Philipp Doerrenberg, Denvil Duncan, Clemens Fuest and Andreas Peichl

No 6275, IZA Discussion Papers from Institute of Labor Economics (IZA)

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.

Keywords: political economy; tax morale; tax compliance; optimal taxation (search for similar items in EconPapers)
JEL-codes: D7 H2 H3 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2012-01
New Economics Papers: this item is included in nep-iue and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Published - substantially revised version published in: Kyklos, 2014, 67 (1), 29-53

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Working Paper: Nice Guys Finish Last: Are People with Higher Tax Morale Taxed more Heavily? (2012)
Working Paper: Nice guys finish last: are people with higher tax morale taxed more heavily? (2012)
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