Reactance to taxation: Employers’ attitudes towards taxes

Taxes limit an individual’s freedom to make autonomous decisions about his or her income. A person is likely to respond to restrictions on his or her own freedom or perceived restrictions by reactance if opposition is a promising means for reestablishing the initial situation. Reactance as a consequence of perceived limitation of freedom is likely to manifest itself through change of attitudes, tax morale, and tax behavior. It is hypothesized that employers who have been running their business only a short time perceive taxes as a drastic cut in their profit and possibilities for investments and tend to feel limited their freedom and consequently display reactance more than employers who have had more extensive experience with their firms and the tax system. A sample of 117 employers with one or more dependent workers completed a questionnaire on (a) perceived limitation of one’s freedom through tax obligations, (b) attitudes towards tax evasion, (c) moral standards with regard to paying taxes, (d) actions to reduce or avoid taxes, and (e) demographic characteristics. As predicted, perceived restriction of freedom was correlated with positive attitudes toward tax evasion, lower tax morale, and reported tendencies to act against paying taxes. Employers who had run their firm only a short time felt greater loss of freedom and displayed greater reactance than employers with more extensive experience.     

Attitudes towards inheritance taxation – results from a survey experiment

Inheritance taxation divides public opinion and is among the most unpopular taxes in many countries, although only a minority of people have to pay it. Using a survey experiment with vignettes on a sample of German citizens (N = 479), we examine attitudes towards inheritance taxation. Our results reveal several relevant dimensions for a proposed fair inheritance tax rate (PITR): The PITR decreases with a close relationship between testator and heir and when the asset is a family-occupied house or family enterprise compared with a “lump sum”. It increases with the value of bequest and income of the heir representing equity considerations. Respondents advocate higher tax rates to reduce fiscal budget deficits. Respondents with a strong family orientation propose a low inheritance tax rate.     

Veblen’s theory of the leisure class revisited: implications for optimal income taxation

Several previous studies have demonstrated the importance of relative consumption comparisons for public policy. Yet, almost all of them have ignored the role of leisure for status comparisons. Inspired by Veblen (The theory of the leisure class. Macmillan, New York, 1899), this paper assumes that people care about their relative consumption and that leisure has a displaying role in making relative consumption more visible, based on a two-type model of optimal income taxation. While increased importance of relative consumption typically implies higher marginal income tax rates, in line with previous research, the effect of leisure-induced consumption visibility is to make the income tax more regressive in terms of ability.