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Tax morale and fairness in conflict an experiment

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  • Engel, Christoph
  • Mittone, Luigi
  • Morreale, Azzurra

Abstract

Most people pay their taxes most of the time, even if the expected disutility from enforcement is too low to deter tax evasion. One potential reason is tax morale and, more specifically, rule following. In a lab experiment, we show that the willingness to pay taxes just because participants are told they are supposed to pay is indeed pronounced. Yet compliance is reduced if participants learn that income is heterogeneous. The effect is driven by participants with the lowest income. The reduction obtains irrespective of the tax regime. If the tax is proportional to income, or progressive, participants become more skeptical about the willingness of participants with high income to comply.

Suggested Citation

  • Engel, Christoph & Mittone, Luigi & Morreale, Azzurra, 2020. "Tax morale and fairness in conflict an experiment," Journal of Economic Psychology, Elsevier, vol. 81(C).
    • Handle: RePEc:eee:joepsy:v:81:y:2020:i:c:s0167487020300751
    DOI: 10.1016/j.joep.2020.102314
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    Citations

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    Cited by:

    1. Amedeo Argentiero & Sandro Casal & Luigi Mittone & Azzurra Morreale, 2021. "Tax evasion and inequality: some theoretical and empirical insights," Economics of Governance, Springer, vol. 22(4), pages 309-320, December.
    2. Fatas, Enrique & Nosenzo, Daniele & Sefton, Martin & Zizzo, Daniel John, 2021. "A self-funding reward mechanism for tax compliance," Journal of Economic Psychology, Elsevier, vol. 86(C).
    3. Hartmann, Andre J. & Gangl, Katharina & Kasper, Matthias & Kirchler, Erich & Kocher, Martin G. & Mueller, Martin & Sonntag, Axel, 2022. "The economic crisis during the COVID-19 pandemic has a negative effect on tax compliance: Results from a scenario study in Austria," Journal of Economic Psychology, Elsevier, vol. 93(C).
    4. Alice Guerra & Brooke Harrington, 2023. "Regional variation in tax compliance and the role of culture," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 40(1), pages 139-152, April.
    5. YoungRok Kim & Hongyu Wan, 2022. "The effect of fairness on tax morale in South Korea: a framed question approach," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 69(1), pages 103-123, March.
    6. Ziano, Ignazio & Lembregts, Christophe & Pandelaere, Mario, 2022. "People weigh salaries more than ratios in judgments of income inequality, fairness, and demands for redistribution," Journal of Economic Psychology, Elsevier, vol. 89(C).
    7. Klaser, Klaudijo & Mittone, Luigi, 2022. "Can the rawlsian veil of ignorance foster tax compliance? Evidence from a laboratory experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 99-113.

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    More about this item

    Keywords

    Rule following; Fairness; Tax evasion; Tax morale; Heterogeneity; Beliefs; Path model;
    All these keywords.

    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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