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Tax Morale, Slippery-Slope Framework and Tax Compliance: A Cross-section Analysis

  • Gabriele Ruiu

    (University of Cassino)

  • Gaetano Lisi

    (University of Cassino)

Following two important strands of tax compliance literature, this empirical paper develops a cross-section analysis in order to test both the role of tax morale on tax compliance decisions and the main predictions of the slippery slope framework. Using data from the World Value Surveys (WWS), we find empirical support for the slippery slope framework, since trust in and power of tax authorities are negatively and significantly related to a proxy for tax non-compliance behavior given by the size of the hidden economy. In particular, trust in tax authorities exerts a larger effect on shadow economy than the power of tax authorities. Instead, the relation between tax morale and our proxy for tax evasion is not statistically significant.

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Paper provided by Universita' di Cassino, Dipartimento di Scienze Economiche in its series Working Papers with number 2011-05.

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Length: 35 pages
Date of creation: 18 Jul 2011
Date of revision:
Handle: RePEc:css:wpaper:2011-05
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  1. Gaetano Lisi & Maurizio Pugno, 2011. "Tax Morale, Entrepreneurship, and the Irregular Economy," Working Papers 2011-01, Universita' di Cassino, Dipartimento di Scienze Economiche.
  2. Bruno S. Frey & Benno Torgler, 2006. "Tax Morale and Conditional Cooperation," IEW - Working Papers 286, Institute for Empirical Research in Economics - University of Zurich.
  3. Schneider, Friedrich & Buehn, Andreas & Montenegro, Claudio E., 2010. "Shadow economies all over the world : new estimates for 162 countries from 1999 to 2007," Policy Research Working Paper Series 5356, The World Bank.
  4. Halla Martin, 2012. "Tax Morale and Compliance Behavior: First Evidence on a Causal Link," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(1), pages 1-27, April.
  5. Benno Torgler, 2003. "Tax Morale, Rule-Governed Behaviour and Trust," Constitutional Political Economy, Springer, vol. 14(2), pages 119-140, June.
  6. Falkinger, Josef, 1995. "Tax evasion, consumption of public goods and fairness," Journal of Economic Psychology, Elsevier, vol. 16(1), pages 63-72, March.
  7. Gaetano Lisi, 2011. "Job search theory and the slippery slope framework: an attempt to integration," Working Papers 2011-02, Universita' di Cassino, Dipartimento di Scienze Economiche.
  8. Benno Torgler & Markus Schaffner & Alison Macintyre, 2007. "Tax Compliance, Tax Morale And Governance Quality," School of Economics and Finance Discussion Papers and Working Papers Series 225, School of Economics and Finance, Queensland University of Technology.
  9. Guiso, Luigi & Sapienza, Paola & Zingales, Luigi, 2002. "People's Opium? Religion and Economic Attitudes," CEPR Discussion Papers 3588, C.E.P.R. Discussion Papers.
  10. Benno Torgler & Friedrich Schneider, 2007. "Shadow Economy, Tax Morale, Governance and Institutional Quality: A Panel Analysis," CREMA Working Paper Series 2007-02, Center for Research in Economics, Management and the Arts (CREMA).
  11. Lars P. Feld & Bruno S. Frey, 2000. "Trust Breeds Trust: How Taxpayers are Treated," CESifo Working Paper Series 322, CESifo Group Munich.
  12. Guglielmo Barone & Sauro Mocetti, 2011. "Tax morale and public spending inefficiency," International Tax and Public Finance, Springer, vol. 18(6), pages 724-749, December.
  13. James Alm & Jorge Martinez-Vazque & Benno Torgler, 2006. "Russian attitudes toward paying taxes – before, during, and after the transition," International Journal of Social Economics, Emerald Group Publishing, vol. 33(12), pages 832-857, December.
  14. Alm, James & McClelland, Gary H. & Schulze, William D., 1992. "Why do people pay taxes?," Journal of Public Economics, Elsevier, vol. 48(1), pages 21-38, June.
  15. Alm, James & Torgler, Benno, 2006. "Culture differences and tax morale in the United States and in Europe," Journal of Economic Psychology, Elsevier, vol. 27(2), pages 224-246, April.
  16. Allingham, Michael G. & Sandmo, Agnar, 1972. "Income tax evasion: a theoretical analysis," Journal of Public Economics, Elsevier, vol. 1(3-4), pages 323-338, November.
  17. Friedrich G. Schneider & Benno Torgler, 2006. "What shapes attitudes toward paying taxes? Evidence from multicultural european countries," Economics working papers 2006-08, Department of Economics, Johannes Kepler University Linz, Austria.
  18. Algan, Yann & Cahuc, Pierre, 2005. "The Roots of Low European Employment : Family Culture ?," CEPREMAP Working Papers (Docweb) 0512, CEPREMAP.
  19. Alesina, Alberto & La Ferrara, Eliana, 2002. "Who trusts others?," Journal of Public Economics, Elsevier, vol. 85(2), pages 207-234, August.
  20. Halla, Martin & Schneider, Friedrich, 2008. "Taxes and Benefits: Two Distinct Options to Cheat on the State?," IZA Discussion Papers 3536, Institute for the Study of Labor (IZA).
  21. Sandmo, Agnar, 2005. "The Theory of Tax Evasion: A Retrospective View," National Tax Journal, National Tax Association, vol. 58(4), pages 643-63, December.
  22. Joel Slemrod, 2007. "Cheating Ourselves: The Economics of Tax Evasion," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 25-48, Winter.
  23. Benno Torgler, 2003. "Tax Morale in Latin America," Working papers 2003/03, Faculty of Business and Economics - University of Basel.
  24. Traxler, Christian, 2006. "Social Norms and Conditional Cooperative Taxpayers," Discussion Papers in Economics 1202, University of Munich, Department of Economics.
  25. Elster, Jon, 1989. "Social Norms and Economic Theory," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 99-117, Fall.
  26. Benno Torgler, 2003. "Tax Morale and Institutions," CREMA Working Paper Series 2003-09, Center for Research in Economics, Management and the Arts (CREMA).
  27. repec:cup:cbooks:9780521876742 is not listed on IDEAS
  28. Ann-Sofie Kolm & Birthe Larsen, 2002. "Social Norm, the Informal Sector, and Unemployment," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 59(3), pages 407-, August.
  29. Stephan Muehlbacher & Erich Kirchler, 2010. "Tax Compliance by Trust and Power of Authorities," International Economic Journal, Taylor & Francis Journals, vol. 24(4), pages 607-610.
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