Details
| Original language | English |
|---|---|
| Pages (from-to) | 1-16 |
| Number of pages | 16 |
| Journal | Journal of economic psychology |
| Volume | 35 |
| Early online date | 7 Jan 2013 |
| Publication status | Published - Apr 2013 |
Abstract
In this paper, both a conjoint analysis and a lab experiment are conducted to analyze the influence of changes in the tax rate and the tax base on the perceived tax burden. Our results show that the majority of individuals do not make rational tax decisions based on the actual tax burden but rather use simple decision heuristics. This leads to an irrationally high impact of changes in nominal tax rates on the perceived tax burden. Taxpayers favor tax options that apply a lower tax rate on their gross income over a higher tax rate applied on their net income despite the lower actual tax burden of the latter option. This result suggests that politicians could combine increasing fiscal revenues and decreasing subjects' tax perception. Furthermore, overestimation of tax rate changes increases considerably when information on tax rate is considered first (framing effect).
Keywords
- Behavioral public finance, Decision heuristics, Framing effects, Perceived tax burden, Tax-cut-cum-base-broadening
ASJC Scopus subject areas
- Psychology(all)
- Applied Psychology
- Social Sciences(all)
- Sociology and Political Science
- Economics, Econometrics and Finance(all)
- Economics and Econometrics
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In: Journal of economic psychology, Vol. 35, 04.2013, p. 1-16.
Research output: Contribution to journal › Article › Research › peer review
}
TY - JOUR
T1 - Decision heuristics and tax perception
T2 - An analysis of a tax-cut-cum-base-broadening policy
AU - Blaufus, Kay
AU - Bob, Jonathan
AU - Hundsdoerfer, Jochen
AU - Kiesewetter, Dirk
AU - Weimann, Joachim
PY - 2013/4
Y1 - 2013/4
N2 - In this paper, both a conjoint analysis and a lab experiment are conducted to analyze the influence of changes in the tax rate and the tax base on the perceived tax burden. Our results show that the majority of individuals do not make rational tax decisions based on the actual tax burden but rather use simple decision heuristics. This leads to an irrationally high impact of changes in nominal tax rates on the perceived tax burden. Taxpayers favor tax options that apply a lower tax rate on their gross income over a higher tax rate applied on their net income despite the lower actual tax burden of the latter option. This result suggests that politicians could combine increasing fiscal revenues and decreasing subjects' tax perception. Furthermore, overestimation of tax rate changes increases considerably when information on tax rate is considered first (framing effect).
AB - In this paper, both a conjoint analysis and a lab experiment are conducted to analyze the influence of changes in the tax rate and the tax base on the perceived tax burden. Our results show that the majority of individuals do not make rational tax decisions based on the actual tax burden but rather use simple decision heuristics. This leads to an irrationally high impact of changes in nominal tax rates on the perceived tax burden. Taxpayers favor tax options that apply a lower tax rate on their gross income over a higher tax rate applied on their net income despite the lower actual tax burden of the latter option. This result suggests that politicians could combine increasing fiscal revenues and decreasing subjects' tax perception. Furthermore, overestimation of tax rate changes increases considerably when information on tax rate is considered first (framing effect).
KW - Behavioral public finance
KW - Decision heuristics
KW - Framing effects
KW - Perceived tax burden
KW - Tax-cut-cum-base-broadening
UR - http://www.scopus.com/inward/record.url?scp=84873273705&partnerID=8YFLogxK
U2 - 10.1016/j.joep.2012.12.004
DO - 10.1016/j.joep.2012.12.004
M3 - Article
AN - SCOPUS:84873273705
VL - 35
SP - 1
EP - 16
JO - Journal of economic psychology
JF - Journal of economic psychology
SN - 0167-4870
ER -