Negative Responses to Taxes: Causes and Mitigation

Abstract

Hatred of taxes goes beyond economics. The psychology of tax aversion and what policy makers can do to help. Key Points • • Negative reactions to taxes can be costly. Evasion and avoidance reduce U.S. government revenue by billions of dollars per year, and negative tax attitudes reduce trust in government. • • Misunderstandings of tax payments and benefits underlie many individuals' negative reactions to taxes. • • Small changes to the tax collection process may improve attitudes and compliance. • • Eliciting feedback, connecting payments to benefits, reducing hassles, and appealing to norms are all promising interventions. • • The Internal Revenue Service and government spokespersons can influence tax attitudes.

Perspectives on mental accounting: An exploration of budgeting and investing

“…While the frequency with which a mental account is evaluated is generally endogenously chosen, temporal bracketing can sometimes be exogenously imposed by others with meaningful consequences. For instance, temporal decoupling of expenditures (e.g., the payment of a tax and the later use of tax revenue) can affect attitudes toward the eventual use of those funds (Sussman & Olivola, ; see also Sussman & White, forthcoming).…”

A comparative study of COVID-19 emergency funds allocated to the health sector: US, UK, and Canada

“…[51] Rather, evidence showed that a disconnection between tax obligations (e.g., hospitals’ capital losses) and individual taxpayer benefits caused negative tax attitudes. [52] We focused on needs-based criteria as the first-level approximation of allocative efficiency given the general public support for meeting health needs, which can be objectively conceptualized as disease burden and measured as caseloads. Whereas public preference data have been lacking and can be the basis for more fine-grained allocations across specific services subjectively valued by the public.…”