Tax morale and (de-)centralization: An experimental study
AbstractWe consider an economy composed of two regions. Each of them provides a public good whose benefits reach beyond local boundaries. In case of decentralization, taxes collected by members of a region are spent only on that region's public good. In case of centralization, tax receipts from the two regions are pooled and used to finance both public goods according to the population size of each region. The experiment shows that centralization induces lower tax morale and less efficient outcomes. The reasons are that centralization gives rise to an interregional incentive problem and creates inequalities in income between regions.
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 EconWPA in its series Public Economics with number 0511014.
Length: 34 pages
Date of creation: 17 Nov 2005
Date of revision:
Note: Type of Document - pdf; pages: 34
Contact details of provider:
Web page: http://184.108.40.206
Tax morale; Fiscal federalism; Public goods experiments;
Other versions of this item:
- Werner Güth & Vittoria Levati & Rupert Sausgruber, 2005. "Tax morale and (de-)centralization: An experimental study," Public Choice, Springer, vol. 125(1), pages 171-188, July.
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
- H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-11-19 (All new papers)
- NEP-EXP-2005-11-19 (Experimental Economics)
- NEP-PBE-2005-11-19 (Public Economics)
- NEP-PUB-2005-11-19 (Public Finance)
- NEP-URE-2005-11-19 (Urban & Real Estate Economics)
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.:
- Benno Torgler & Jan Werner, 2005. "Fiscal Autonomy and Tax Morale: Evidence from Germany," CREMA Working Paper Series 2005-07, Center for Research in Economics, Management and the Arts (CREMA).
- Andreoni, James, 1988. "Why free ride? : Strategies and learning in public goods experiments," Journal of Public Economics, Elsevier, vol. 37(3), pages 291-304, December.
- Fehr, Ernst & Schmidt, Klaus M., 1998.
"A Theory of Fairness, Competition and Cooperation,"
CEPR Discussion Papers
1812, C.E.P.R. Discussion Papers.
- Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory Of Fairness, Competition, And Cooperation," The Quarterly Journal of Economics, MIT Press, vol. 114(3), pages 817-868, August.
- Keser, Claudia & van Winden, Frans, 2000. " Conditional Cooperation and Voluntary Contributions to Public Goods," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(1), pages 23-39, March.
- Sven Stö & Christian Traxler, 2005. "Tax Evasion and Auditing in a Federal Economy," International Tax and Public Finance, Springer, vol. 12(4), pages 515-531, August.
- Rachel T. A. Croson, 2007. "Theories Of Commitment, Altruism And Reciprocity: Evidence From Linear Public Goods Games," Economic Inquiry, Western Economic Association International, vol. 45(2), pages 199-216, 04.
- Lars P. Feld & Bruno S. Frey, 2002.
"Trust breeds trust: How taxpayers are treated,"
Economics of Governance,
Springer, vol. 3(2), pages 87-99, 07.
- Lars P. Feld & Bruno S. Frey, 2000. "Trust Breeds Trust: How Taxpayers are Treated," CESifo Working Paper Series 322, CESifo Group Munich.
- Lars P. Feld & Bruno S. Frey, . "Trust Breeds Trust: How Taxpayers are Treated," IEW - Working Papers 098, Institute for Empirical Research in Economics - University of Zurich.
- Fischbacher, Urs & Gachter, Simon & Fehr, Ernst, 2001.
"Are people conditionally cooperative? Evidence from a public goods experiment,"
Elsevier, vol. 71(3), pages 397-404, June.
- Urs Fischbacher & Simon Gaechter & Ernst Fehr, . "Are People Conditionally Cooperative? Evidence from a Public Goods Experiment," IEW - Working Papers 016, Institute for Empirical Research in Economics - University of Zurich.
- Andreoni, J. & Erard, B. & Feinstein, J., 1996.
9610r, Wisconsin Madison - Social Systems.
- Palfrey, Thomas R & Prisbrey, Jeffrey E, 1997. "Anomalous Behavior in Public Goods Experiments: How Much and Why?," American Economic Review, American Economic Association, vol. 87(5), pages 829-46, December.
- Warr, Peter G., 1982. "Pareto optimal redistribution and private charity," Journal of Public Economics, Elsevier, vol. 19(1), pages 131-138, October.
- Cremer, Helmuth & Gahvari, Firouz, 2000. "Tax evasion, fiscal competition and economic integration," European Economic Review, Elsevier, vol. 44(9), pages 1633-1657, October.
- 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.
- 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.
- Robert P. Inman & Daniel L. Rubinfeld, 1997. "Rethinking Federalism," Journal of Economic Perspectives, American Economic Association, vol. 11(4), pages 43-64, Fall.
- Claudia Keser & Frans A.A.M. van Winden, 2000. "Conditional Cooperation and Voluntary Contributions to Public Goods," Tinbergen Institute Discussion Papers 00-011/1, Tinbergen Institute.
- Traxler, Christian, 2010.
"Social norms and conditional cooperative taxpayers,"
European Journal of Political Economy,
Elsevier, vol. 26(1), pages 89-103, March.
- Traxler, Christian, 2006. "Social Norms and Conditional Cooperative Taxpayers," Discussion Papers in Economics 1202, University of Munich, Department of Economics.
- Stefan Voigt, 2011.
"Positive constitutional economics II—a survey of recent developments,"
Springer, vol. 146(1), pages 205-256, January.
- Stefan Voigt, 2009. "Positive Constitutional Economics II—A Survey of Recent Developments," MAGKS Papers on Economics 200936, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
- repec:ays:ispwps:paper0729 is not listed on IDEAS
- Lars Gläser & Martin Halla, 2006.
"Die EU-Zinsenrichtlinie: Ein Schuss in den Ofen?,"
Economics working papers
2006-14, Department of Economics, Johannes Kepler University Linz, Austria.
- Bergh, Andreas, 2008. "A critical note on the theory of inequity aversion," The Journal of Socio-Economics, Elsevier, vol. 37(5), pages 1789-1796, October.
- Nichita Ramona-Anca & Batrancea Larissa-Margareta, 2012. "The Implications Of Tax Morale On Tax Compliance Behavior," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 739-744, July.
- Lars P. Feld & Bruno S. Frey, 2006.
"Tax Compliance as the Result of a Psychological Tax Contract: The Role of Incentives and Responsive Regulation,"
IEW - Working Papers
287, Institute for Empirical Research in Economics - University of Zurich.
- Lars P. Feld & Bruno S. Frey, 2006. "Tax Compliance as the Result of a Psychological Tax Contract: The Role of Incentives and Responsive Regulation," CREMA Working Paper Series 2006-10, Center for Research in Economics, Management and the Arts (CREMA).
- 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.
- Guglielmo Barone & Sauro Mocetti, 2011.
"Tax morale and public spending inefficiency,"
International Tax and Public Finance,
Springer, vol. 18(6), pages 724-749, December.
- Güth, Werner & Levati, M. Vittoria & Ploner, Matteo, 2008.
"Social identity and trust--An experimental investigation,"
The Journal of Socio-Economics,
Elsevier, vol. 37(4), pages 1293-1308, August.
- Werner Güth & M. Vittoria Levati & Matteo Ploner, 2007. "Social identity and trust - An experimental investigation," Papers on Strategic Interaction 2006-41, Max Planck Institute of Economics, Strategic Interaction Group.
- Werner Güth & Matteo Ploner & Vittoria Levati, . "The Effect of Group Identity in an Investment Game," Papers on Strategic Interaction 2005-06, Max Planck Institute of Economics, Strategic Interaction Group.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA).
If references are entirely missing, you can add them using this form.