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Where Do My Tax Dollars Go? Tax Morale Effects of Perceived Government Spending

Author

Listed:
  • Matias Giaccobasso
  • Brad Nathan
  • Ricardo Perez-Truglia
  • Alejandro Zentner

Abstract

Do perceptions about government spending affect willingness to pay taxes? We test this hypothesis with a natural field experiment that focuses on the allocation of property taxes to public schools. Our results show that taxpayers often misperceive the destination of their tax dollars. By introducing shocks to households' perceptions via an information-provision experiment, we find that perceptions of how tax dollars are used significantly affect the probability of filing a tax appeal. Moreover, the effects are consistent with reciprocal motivations: individuals are more willing to pay taxes if they believe that the government services funded by those taxes will provide greater personal benefit.

Suggested Citation

  • Matias Giaccobasso & Brad Nathan & Ricardo Perez-Truglia & Alejandro Zentner, 2025. "Where Do My Tax Dollars Go? Tax Morale Effects of Perceived Government Spending," American Economic Journal: Applied Economics, American Economic Association, vol. 17(4), pages 223-259, October.
    • Handle: RePEc:aea:aejapp:v:17:y:2025:i:4:p:223-59
    DOI: 10.1257/app.20240029
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    Citations

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    Cited by:

    1. Bartak, Jakub & Jabłoński, Łukasz & Obłąkowska, Katarzyna, 2025. "Fiscal policy preferences: Evidence from conjoint experiments in Poland," European Journal of Political Economy, Elsevier, vol. 87(C).
    2. Gordon Burtch & Alejandro Zentner, 2024. "Gender Bias and Property Taxes," Papers 2412.12610, arXiv.org, revised Feb 2025.
    3. McNamara, Trent & Mosquera, Roberto, 2025. "Government transparency and tax compliance: Evidence from an artefactual experiment supplemented with administrative data," Journal of Economic Behavior & Organization, Elsevier, vol. 236(C).
    4. Hoy,Christopher Alexander, 2022. "How Does the Progressivity of Taxes and Government Transfers Impact People’s Willingnessto Pay Tax ? Experimental Evidence across Developing Countries," Policy Research Working Paper Series 10167, The World Bank.
    5. Sebastian Blesse & Philipp Lergetporer & Justus Nover & Katharina Werner, 2023. "Transparency and Policy Competition: Experimental Evidence from German Citizens and Politicians," Rationality and Competition Discussion Paper Series 387, CRC TRR 190 Rationality and Competition.
    6. Zakharov, Alexei, 2024. "Overestimation of social security payments reduces preferences for spending on social policy," European Journal of Political Economy, Elsevier, vol. 85(C).
    7. Kishishita, Daiki & Matsumoto, Tomoko, 2024. "Self-benefits, fiscal risk, and political support for the public healthcare system," European Journal of Political Economy, Elsevier, vol. 85(C).
    8. Patricia Gil & Justin E. Holz & John A. List & Andrew Simon & Alejandro Zentner, 2023. "Toward an Understanding of Tax Amnesties: Theory and Evidence from a Natural Field Experiment," NBER Working Papers 31210, National Bureau of Economic Research, Inc.
    9. Brockmeyer, Anne & Garfias, Francisco & Suárez Serrato, Juan Carlos, 2024. "The Fiscal Contract up Close: Experimental Evidence from Mexico City," CEPR Discussion Papers 19354, C.E.P.R. Discussion Papers.
    10. Zentner, Alejandro & Holz, Justin, 2025. "Frictions in recovering unclaimed property: Evidence from a large-scale natural field experiment," Journal of Public Economics, Elsevier, vol. 249(C).
    11. Wayne Aaron Sandholtz & Pedro C. Vicente, 2024. "Tax morale, public goods, and politics: Experimental evidence from Mozambique," Nova SBE Working Paper Series wp671, Universidade Nova de Lisboa, Nova School of Business and Economics.
    12. Hoy, Christopher, 2025. "How does progressivity impact tax morale? Experimental evidence across developing countries," Journal of Development Economics, Elsevier, vol. 172(C).
    13. Wayne Aaron Sandholtz & Pedro C. Vicente, 2024. "Tax morale, public goods, and politics: Experimental evidence from Mozambique," Nova SBE Working Paper Series wp2404, Universidade Nova de Lisboa, Nova School of Business and Economics.
    14. Fernandez Sierra, Manuel & Gonzalez-Navarro, Marco & Quintana-Domeque, Climent, 2025. "Local Public Goods and Property Tax Compliance: Experimental Evidence from Street Pavement," IZA Discussion Papers 18082, Institute of Labor Economics (IZA).
    15. Bouke Klein Teeselink & Georgios Melios, 2025. "Partisanship, political alignment, and charitable donations," Public Choice, Springer, vol. 203(3), pages 523-538, June.

    More about this item

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare

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