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On the connection between cultural values and personal income taxation

Author

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  • Chargaziya, L.

    (HSE University, Moscow, Russia
    Federal Research Institute for Health Organization and Informatics of Ministry of Health of the Russian Federation, Moscow, Russia)

Abstract

The article explores the relationship between Hofstede's cultural dimensions and personal income taxation, as it is, what was never done in the scientifi c literature. It briefly describes the current level of scientific discourse and history of thought development in this problem field, forming the theoretical basis for substantiating the assumed relationship. Using theoretical reasoning as well as comparative quantitative methods (logistic and linear regression analysis), the paper shows the connection between some of Hofstede's cultural dimensions (power distance, individualism) and the establishment of progressive income taxation and top marginal tax rates. It is found that lower scores of power distance are associated with progressive income taxation, as well as higher tax rates. In addition, some potential mechanisms underlying this relationship are discussed. It is emphasized that cultural values can have two levers of infl uence on tax policy (bottom-up and top-down), since both the politicians responsible for designing tax systems and the citizens who shape the redistribution demand carry the national cultural values. The sample under study includes 115 countries at different levels of economic development.

Suggested Citation

  • Chargaziya, L., 2023. "On the connection between cultural values and personal income taxation," Journal of the New Economic Association, New Economic Association, vol. 58(1), pages 32-46.
    • Handle: RePEc:nea:journl:y:2023:i:58:p:32-46
    DOI: 10.31737/22212264_2023_1_32
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    References listed on IDEAS

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    More about this item

    Keywords

    taxation; tax policy; national culture; Hofstede's dimensions; comparative study;
    All these keywords.

    JEL classification:

    • P5 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems
    • Z1 - Other Special Topics - - Cultural Economics

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