Attitudes Towards Paying Taxes in Austria: An Empirical Analysis

Abstract

Abstract. People mostly pay their taxes although there is a low probability of getting caught and being penalized. Thus, new attempts in the tax compliance literature try to go beyond standard economic theory. This paper examines citizens' attitudes toward paying taxes -what is sometimes termed their "tax morale", or the intrinsic motivation to pay taxes. Tax morale may be a key determinant to explain why people are honest. However, there are very few papers that explore the concept of tax morale theoretically and empirically. This study, based on the World Values Survey and the European Values Survey, therefore attempts to fill this gap in the literature, focusing on tax morale in Austria. Societal variables such as trust or pride have been identified as key determinants that shape tax morale in Austria. Furthermore, a lower perceived compliance leads to a decrease of tax morale, which indicates that social comparisons are relevant. The results also show a decrease of tax morale between 1990 and 1999, although Austria's taxpayers still have a very high tax morale compared to other European countries.

Social norms and conditional cooperative taxpayers

“…The more a community takes over the position of a social reference group, the more detrimental are norm 1 Compare e.g. Alm et al (1992), Alm and Torgler (2006), Baldry (1986), Gërxhani and Schram (2005), Güth et al (2005), Kirchler et al (2003), Lewis (1982Lewis ( , 1986, Torgler and Schneider (2005). Compare also chapter 6 in Cowell (1990) and Torgler (2006).…”

“…3 See e.g. Frey and Torgler (2006), Porcano (1988), Spicer and Hero (1985), Torgler and Schneider (2005). 4 Compare who provides a comprehensive survey of experimental as well as field evidence of conditional cooperative behavior.…”

Tax morale, Occupation and Income Level: An Analysis of Portuguese Taxpayers

“…The more aware a government is of citizens preferences, the better its policies will reflect citizens' needs [10]. Church as an institution induces moral constraints in a community and influences people's behavior [11]. Many economists have made use of subjective questions on welfare (financial satisfaction), well-being, and health satisfaction, among others, to address a wide range of scientifically and politically relevant questions.…”

“…Over the years, empirical research has systematically stressed the importance of socio-demographic variables in the understanding of tax morale [11], [16]. Empirical studies support a tendency for part time employees, housewives and retired taxpayers to have higher tax morale, compared to other taxpayers [3].…”

“…Greater income can contribute to an increase or a decrease on tax morale, depending on risk preferences, income tax rate progressivity, and opportunity costs of time spent on dealing with tax issues [7]. However there is a tendency for individuals with higher incomes to exhibit lower levels of tax morale [11]. The Methodology and Model…”