It's all about tax rates: An empirical study of tax perception
AbstractIn this paper we apply conjoint analysis to study the influence of changes in the tax rate and the tax base on the perceived tax burden. Our results show that the majority of individuals do not make rational tax decisions based on the actual tax burden, but rather use simple decision heuristics. This leads to the importance of the tax rate being significantly overestimated and the importance of the tax base being significantly underestimated. Furthermore we determine framing effects and show that under specific assumptions, a rise in the actual tax burden can lead to a electoral success. --
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Bibliographic InfoPaper provided by arqus - Arbeitskreis Quantitative Steuerlehre in its series arqus Discussion Papers in Quantitative Tax Research with number 106.
Date of creation: 2010
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behavioral public finance; decision heuristics; framing effects; perceived tax burden; tax-cut-cum-base-broadening; tax complexity; tax illusion;
Find related papers by JEL classification:
- D03 - Microeconomics - - General - - - Behavioral Economics; Underlying Principles
- G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
- H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
- K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law
- M41 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - Accounting
This paper has been announced in the following NEP Reports:
- NEP-ACC-2010-10-16 (Accounting & Auditing)
- NEP-ALL-2010-10-16 (All new papers)
- NEP-CBE-2010-10-16 (Cognitive & Behavioural Economics)
- NEP-PBE-2010-10-16 (Public Economics)
- NEP-PUB-2010-10-16 (Public Finance)
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