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Tax morale and conditional cooperation

  • Frey, Bruno S.
  • Torgler, Benno

Why so many people pay their taxes, even though fines and audit probability are low, is a central question in the tax compliance literature. Positing a homo economicus having a refined motivation structure sheds light on this puzzle. This paper provides empirical evidence for the relevance of conditional cooperation, using survey data from 30 West and East European countries. We find a high correlation between perceived tax evasion and tax morale. The results remain robust after exploiting endogeneity and conducting several robustness tests. We also observe a strong positive correlation between institutional quality and tax morale.

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Article provided by Elsevier in its journal Journal of Comparative Economics.

Volume (Year): 35 (2007)
Issue (Month): 1 (March)
Pages: 136-159

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Handle: RePEc:eee:jcecon:v:35:y:2007:i:1:p:136-159
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622864

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