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Coming Closer? Tax Morale, Deterrence and Social Learning after German Unification

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  • Lars P. Feld
  • Benno Torgler

    ()
    (QUT)

  • Bin Ding

Abstract

The paper explores whether a social learning model helps explain the observed conformity and compliance with social norms after the unification of Germany. We compare tax morale, (the willingness to pay taxes), between inhabitants of East and West Germany during the post-unification period, using three World Values Survey/European Values Survey waves between 1990 and 1999. German unification is of particular interest in analysing tax morale since it is close to a quasi-natural experiment. Factors such as a common language, similar education systems and a shared cultural and political history prior to the separation after the Second World War can be controlled because they are similar. Our findings indicate that the social learning model employed in this study helps to predict the development of tax morale over time. It is clear that tax morale values converged within a mere nine years after unification, due largely to a strong change in the level of tax morale in the East. Thus, the paper contributes to the literature that attempts to explain how norms arise, how they are maintained and how they are changed.

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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 232.

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Length: 38 pages
Date of creation: 16 Jun 2008
Date of revision: 16 Jun 2008
Handle: RePEc:qut:dpaper:232

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Keywords: Tax Morale; Social Learning; Conformity; Convergence Process; Deterrence; Quasi-Natural Experiment;

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References

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Cited by:
  1. Gebhard Kirchgässner, 2010. "Tax Morale, Tax Evasion, and the Shadow Economy," University of St. Gallen Department of Economics working paper series 2010 2010-17, Department of Economics, University of St. Gallen.
  2. Torgler, Benno, 2011. "Tax morale and compliance : review of evidence and case studies for Europe," Policy Research Working Paper Series 5922, The World Bank.

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