Taxes and Benefits: Two Distinct Options to Cheat on the State?
AbstractEconomists have studied many aspects of tax evasion. The vast literature has concentrated on the individual taxpayer’s decision on avoiding taxes by underreporting income. However no comprehensive investigation of the individual taxpayer’s decision on claiming unjustified subsidies (e. g. by underreporting income) exists so far. Employing Austrian survey data we show that the basic attitude towards avoiding taxes (tax morale) and claiming unjustified subsidies (benefit morale) have different determinants. Our applied econometric framework relaxes the often stated assumption of the exogeneity of income as an explaining variable of tax morale. Furthermore we find empirical evidence that tax morale and benefit morale have different impact on actual behavior: Whereas a low benefit morale leads indeed to unjustified claims on benefits and therefore to higher income, we find no statistically significant effect of tax morale on tax evasion. These different determinants and effects of tax morale and benefit morale can be explained by differences in the deterrence factors from the traditional economic approach, by alternative theories or simply by more opportunities to cheat on the state by unjustified subsidies in contrast to avoiding taxes.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Department of Economics, Johannes Kepler University Linz, Austria in its series Economics working papers with number 2005-05.
Date of creation: Aug 2005
Date of revision:
tax; subsidies; tax morale; benefit morale; tax evasion; benefit fraud;
Other versions of this item:
- Halla, Martin & Schneider, Friedrich, 2008. "Taxes and Benefits: Two Distinct Options to Cheat on the State?," IZA Discussion Papers 3536, Institute for the Study of Labor (IZA).
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-12-09 (All new papers)
- NEP-PBE-2006-12-09 (Public Economics)
- NEP-PUB-2006-12-09 (Public Finance)
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.:
- Gary S. Becker, 1974.
"Crime and Punishment: An Economic Approach,"
in: Essays in the Economics of Crime and Punishment, pages 1-54
National Bureau of Economic Research, Inc.
- Bruno S. Frey & Benno Torgler, 2006.
"Tax Morale and Conditional Cooperation,"
IEW - Working Papers
286, Institute for Empirical Research in Economics - University of Zurich.
- Frey, Bruno S. & Torgler, Benno, 2006. "Tax Morale and Conditional Cooperation," Berkeley Olin Program in Law & Economics, Working Paper Series qt3rd3f982, Berkeley Olin Program in Law & Economics.
- Bruno S. Frey & Benno Torgler, 2006. "Tax Morale and Conditional Cooperation," CREMA Working Paper Series 2006-11, Center for Research in Economics, Management and the Arts (CREMA).
- Andreoni, J. & Erard, B. & Feinstein, J., 1996.
9610r, Wisconsin Madison - Social Systems.
- Samuel Bowles, 1998. "Endogenous Preferences: The Cultural Consequences of Markets and Other Economic Institutions," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 75-111, March.
- Andrei Shleifer, 2004.
"Does Competition Destroy Ethical Behavior?,"
NBER Working Papers
10269, National Bureau of Economic Research, Inc.
- Joel Slemrod & Shlomo Yitzhaki, 2000.
"Tax Avoidance, Evasion, and Administration,"
NBER Working Papers
7473, National Bureau of Economic Research, Inc.
- Sophia Rabe-Hesketh & Anders Skrondal, 2012. "Multilevel and Longitudinal Modeling Using Stata, 3rd Edition," Stata Press books, StataCorp LP, edition 3, number mimus2, July.
- Clotfelter, Charles T, 1983. "Tax Evasion and Tax Rates: An Analysis of Individual Returns," The Review of Economics and Statistics, MIT Press, vol. 65(3), pages 363-73, August.
- Dubin, Jeffrey A. & Wilde, Louis L., 1988. "An Empirical Analysis of Federal Income Tax Auditing and Compliance," National Tax Journal, National Tax Association, vol. 41(1), pages 61-74, March Cit.
- Heinemann, Friedrich, 2007.
"Is the Welfare State Self-destructive? A Study of Government Benefit Morale,"
ZEW Discussion Papers
07-029, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Friedrich Heinemann, 2008. "Is the Welfare State Self-Destructive? A Study of Government Benefit Morale," Kyklos, Wiley Blackwell, vol. 61(2), pages 237-257, 05.
- Bordignon, Massimo, 1993. "A fairness approach to income tax evasion," Journal of Public Economics, Elsevier, vol. 52(3), pages 345-362, October.
- Greenberg, David & Moffitt, Robert & Friedmann, John, 1981. "Underreporting and Experimental Effects on Work Effort: Evidence from the Gary Income Maintenance Experiment," The Review of Economics and Statistics, MIT Press, vol. 63(4), pages 581-89, November.
- Lindbeck, Assar & Nyberg, Sten & Weibull, Jörgen W., 1997.
"Social Norms and Economic Incentives in the Welfare State,"
Working Paper Series
476, Research Institute of Industrial Economics.
- Assar Lindbeck & Sten Nyberg & Jšrgen W. Weibull, 1999. "Social Norms And Economic Incentives In The Welfare State," The Quarterly Journal of Economics, MIT Press, vol. 114(1), pages 1-35, February.
- James Alm & Benno Torgler, 2004.
"Culture Differences and Tax Morale in the United States and in Europe,"
CREMA Working Paper Series
2004-14, Center for Research in Economics, Management and the Arts (CREMA).
- Alm, James & Torgler, Benno, 2006. "Culture differences and tax morale in the United States and in Europe," Journal of Economic Psychology, Elsevier, vol. 27(2), pages 224-246, April.
- Östling Robert, 2009.
"Economic Influences on Moral Values,"
The B.E. Journal of Economic Analysis & Policy,
De Gruyter, vol. 9(1), pages 1-26, January.
- Lindbeck, Assar, 1997.
"Incentives and Social Norms in Household Behavior,"
American Economic Review,
American Economic Association, vol. 87(2), pages 370-77, May.
- Torgler, Benno, 2002. " Speaking to Theorists and Searching for Facts: Tax Morale and Tax Compliance in Experiments," Journal of Economic Surveys, Wiley Blackwell, vol. 16(5), pages 657-83, December.
- Frey, Bruno S, 1997. "A Constitution for Knaves Crowds Out Civic Virtues," Economic Journal, Royal Economic Society, vol. 107(443), pages 1043-53, July.
- Edward C. Norton & Hua Wang & Chunrong Ai, 2004. "Computing interaction effects and standard errors in logit and probit models," Stata Journal, StataCorp LP, vol. 4(2), pages 154-167, June.
- Dominik H. Enste & Friedrich Schneider, 2000. "Shadow Economies: Size, Causes, and Consequences," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 77-114, March.
- Jonathan S. Feinstein, 1991. "An Econometric Analysis of Income Tax Evasion and its Detection," RAND Journal of Economics, The RAND Corporation, vol. 22(1), pages 14-35, Spring.
- Baldry, Jonathan C, 1987. "Income Tax Evasion and the Tax Schedule: Some Experimental Results," Public Finance = Finances publiques, , vol. 42(3), pages 357-83.
- Douglas Wolf & David Greenberg, 1986. "The Dynamics of Welfare Fraud: An Econometric Duration Model in Discrete Time," Journal of Human Resources, University of Wisconsin Press, vol. 21(4), pages 437-455.
- Alm, James & McClelland, Gary H. & Schulze, William D., 1992. "Why do people pay taxes?," Journal of Public Economics, Elsevier, vol. 48(1), pages 21-38, June.
- Mendoza, Enrique G. & Razin, Assaf & Tesar, Linda L., 1994.
"Effective tax rates in macroeconomics: Cross-country estimates of tax rates on factor incomes and consumption,"
Journal of Monetary Economics,
Elsevier, vol. 34(3), pages 297-323, December.
- Enrique G. Mendoza & Assaf Razin & Linda L. Tesar, 1995. "Effective Tax Rates in Macroeconomics: Cross-Country Estimates of Tax Rates on Factor Incomes and Consumption," NBER Working Papers 4864, National Bureau of Economic Research, Inc.
- Oi, Walter Y. & Idson, Todd L., 1999. "Firm size and wages," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 33, pages 2165-2214 Elsevier.
- Alm, James & Jackson, Betty & McKee, Michael J., 1992. "Estimating the Determinants of Taxpayer Compliance with Experimental Data," National Tax Journal, National Tax Association, vol. 45(1), pages 107-14, March Cit.
- Yaniv, Gideon, 1986. "Fraudulent collection of unemployment benefits : A theoretical analysis with reference to income tax evasion," Journal of Public Economics, Elsevier, vol. 30(3), pages 369-383, August.
- Benno Torgler & Christoph A. Schaltegger, 2006. "Tax Morale: A Survey with a Special Focus on Switzerland," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 142(III), pages 395-425, September.
- Alm, James & Sanchez, Isabel & de Juan, Ana, 1995. "Economic and Noneconomic Factors in Tax Compliance," Kyklos, Wiley Blackwell, vol. 48(1), pages 3-18.
- Besley, Timothy & Coate, Stephen, 1992.
"Understanding welfare stigma: Taxpayer resentment and statistical discrimination,"
Journal of Public Economics,
Elsevier, vol. 48(2), pages 165-183, July.
- Besley, T. & Coate, S., 1990. "Understanding Welfare Stigma: Taxpayer Resentment And Statistical Discrimination," Papers 42, Princeton, Woodrow Wilson School - Discussion Paper.
- Buchanan, James M., 1976. "Taxation in fiscal exchange," Journal of Public Economics, Elsevier, vol. 6(1-2), pages 17-29.
- Bruce, Donald, 2000. "Effects of the United States tax system on transitions into self-employment," Labour Economics, Elsevier, vol. 7(5), pages 545-574, September.
- Benno Torgler, 2005.
"Tax morale in Latin America,"
Springer, vol. 122(1), pages 133-157, January.
- Yaniv, Gideon, 1997. "Welfare fraud and welfare stigma," Journal of Economic Psychology, Elsevier, vol. 18(4), pages 435-451, June.
- Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
- Nigel Rice & Andrew Jones, 1997. "Multilevel models and health economics," Health Economics, John Wiley & Sons, Ltd., vol. 6(6), pages 561-575.
- Crane, Steven E & Nourzad, Farrokh, 1986. "Inflation and Tax Evasion: An Empirical Analysis," The Review of Economics and Statistics, MIT Press, vol. 68(2), pages 217-23, May.
- Jerry L. Kingston & Paul L. Burgess & Robert D. St. Louis, 1986. "Unemployment insurance overpayments: Evidence and implications," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 39(3), pages 323-336, April.
- Elster, Jon, 1989. "Social Norms and Economic Theory," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 99-117, Fall.
- Feld, Lars P & Tyran, Jean-Robert, 2002. "Tax Evasion and Voting: An Experimental Analysis," Kyklos, Wiley Blackwell, vol. 55(2), pages 197-222.
- Alm, James & McClelland, Gary H & Schulze, William D, 1999. "Changing the Social Norm of Tax Compliance by Voting," Kyklos, Wiley Blackwell, vol. 52(2), pages 141-71.
- Alm, James & Jackson, Betty R. & McKee, Michael, 1993. "Fiscal exchange, collective decision institutions, and tax compliance," Journal of Economic Behavior & Organization, Elsevier, vol. 22(3), pages 285-303, December.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ren� B�heim).
If references are entirely missing, you can add them using this form.