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Tax Morale after the Reunification of Germany: Results from a Quasi-Natural Experiment

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  • Lars P. Feld
  • Benno Torgler

    ()
    (QUT)

Abstract

This paper provides a comparison of tax morale between inhabitants of East and West Ger¬many in its post-reunification period, using three World Values Survey/European Values Sur¬vey waves between 1990 and 1999. German reunification is particularly inter¬esting for the ana¬¬ly¬sis of tax morale as it is close to a natural experiment. Many factors can be controlled be¬¬cause they are similar, as, e.g., a common language, similar education systems and a shared cultural and political history prior to the separation after the Second World War. As a conse¬quence, an East-West comparison has a methodological advantage compared to cross-country studies. Our findings show higher tax morale in East than in West Germany. However, in only 9 years after reunification, tax morale values strongly converged, especially due to a strong change in the level of tax morale in the East. We suggest that this convergence in tax morale between East and West Germany, despite efforts of the federal government to increase de¬terrence, indicates that tax morale is more strongly driven by other factors than deterrence.

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Bibliographic Info

Paper provided by School of Economics and Finance, Queensland University of Technology in its series School of Economics and Finance Discussion Papers and Working Papers Series with number 209.

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Length: 41
Date of creation: 01 Mar 2007
Date of revision:
Handle: RePEc:qut:dpaper:209

Note: Lars P. Feld, University of Heidelberg, Alfred-Weber-Institute, Chair of Public Economics, Grabengasse 14, D-69117 Heidelberg, University, Germany, email: lars.feld@awi.uni-heidelberg.de. Benno Torgler, The School of Economics and Finance, Level 8, Z Block, Gardens Point Campus, 2 George Street, Brisbane, QLD 4001, Australia, email: benno.torgler@qut.edu.au. We would like to thank Andreas Schmidt (University of Cologne) for valuable research assistance in coll¬ecting the data on fines and auditing in (West and East) Germany, and Birger Nerré, Doris Aebi, Jan Schnellenbach, and partici¬pants of the 2006 National Tax Association Conference in Boston for helpful comments and suggestions.
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Postal: GPO Box 2434, BRISBANE QLD 4001
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Web page: http://www.bus.qut.edu.au/faculty/economics/
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Keywords: Tax Morale; Tax Evasion; Deterrence; Quasi-Natural Experiment;

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References

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Cited by:
  1. Andreas Bühn & Friedrich Schneider, 2012. "Size and Development of Tax Evasion in 38 OECD Countries: What do we (not) know?," CESifo Working Paper Series 4004, CESifo Group Munich.

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