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The Last Refuge of a Scoundrel? Patriotism and Tax Compliance

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  • Kai A. Konrad
  • Salmai Qari

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.

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Bibliographic Info

Article provided by London School of Economics and Political Science in its journal Economica.

Volume (Year): 79 (2012)
Issue (Month): 315 (07)
Pages: 516-533

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Handle: RePEc:bla:econom:v:79:y:2012:i:315:p:516-533

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References

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  1. Patriotism and tax compliance
    by Economic Logician in Economic Logic on 2009-08-03 20:01:00
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