The Leap of Faith

Abstract

This book examines the evolution of the relationship between taxpayers and their states in Sweden, Italy, the United Kingdom, the United States, and Romania, and asks why tax compliance is so much higher in some countries than others. The book shows that successful states have built strong administrative capacities, tax citizens fairly and equitably, and deliver public services that are tangible to taxpayers. The main substantive chapters explore the history of a particular country demonstrating how and why these capacities were developed (or not). The book is part of a larger project entitled “Willing to Pay?” which brings together historical institutional analysis with experimental methods. A series of articles as well as a subsequent book elaborate the specific findings from the experiments undertaken in each country. These experiments, however, cannot tell us why compliance behavior differs so much across societies. The Leap of Faith offers just such an explanation by showing the history of the relationship between taxpayers and their states over time in several countries, allowing an answer to the question: Why are some countries more successful at implementation than others? The book concludes with a policy-oriented chapter written specifically with tax and revenue administrators in the developing world in mind. Drawing on lessons from the historical chapters it is argued that effective administration and equitable distribution of both taxes and public spending are keys to generating taxpayer consent.

KNOWCON 2020. Knowledge on Economics and Management: Conference Proceedings

“…Analyzes of historical data and trending suggest that while in some countries, despite the high tax burden, taxpayers are disciplined for rewarding better public services and a happier life (eg Sweden), in some countries cultural stereotypes result in significant tax evasion ( Greece, Italy, etc.). (Steinmo, 2018) This is one of the reasons why states are increasingly relying on both technical and non-technical measures to improve tax collection. They focus not only on the tax entity itself, but also its economic environment, region and look for connections in data and patterns of behavior.…”