Tax Evasion and the Importance of Trust
AbstractUnless people pay the taxes they are obliged to pay, a general welfare state will eventually collapse. Thus, for the welfare state to survive in the long run, tax compliance is of utmost importance. Using Swedish individual survey data we analyze which factors affect the perception of tax evasion. The analysis is conducted on ten different taxes and the results differ widely. Hence, we show that it is important to study different taxes separately rather than treating tax evasion as one common phenomenon. In this paper we focus on the importance of different kinds of trust. Whether or not people in general are regarded as trustworthy only has a minor impact on perceived tax evasion. Instead, what matters is trust or distrust in politicians. People who distrust the parliament are more likely than others to think that tax evasion is common, and the result holds for most of the taxes studied. This may have severe long-run consequences for the welfare state. If people stop trusting their leading politicians, social norms about tax compliance deteriorate and the possibilities of collecting taxes for maintain- ing the welfare state are reduced.
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Bibliographic InfoPaper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 179.
Length: 21 pages
Date of creation: 27 Sep 2005
Date of revision:
Publication status: Published in Journal of Socio-Economics, 2009, pages 238-245.
Contact details of provider:
Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/
More information through EDIRC
trust in politicians; generalized trust; social capital; general welfare state; tax policy; tax compliance;
Find related papers by JEL classification:
- H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
- Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Social and Economic Stratification
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-10-08 (All new papers)
- NEP-PBE-2005-10-08 (Public Economics)
- NEP-POL-2005-10-08 (Positive Political Economics)
- NEP-PUB-2005-10-08 (Public Finance)
- NEP-SOC-2005-10-08 (Social Norms & Social Capital)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:CitEc Project, subscribe to its RSS feed for this item.
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"Tax Avoidance and Intra-Family Transfers,"
Working Paper Series
2005:6, Uppsala University, Department of Economics.
- Felix Ebeling & Christoph Feldhaus & Johannes Fendrich, 2012. "Follow the Leader or Follow Anyone - Evidence from a Natural Field Experiment," Cologne Graduate School Working Paper Series 03-04, Cologne Graduate School in Management, Economics and Social Sciences, revised 20 Jan 2013.
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