july 2015 prof. dr. friedrich schneider, university of linz / austria the morals of (not) paying...

July 2015 Prof. Dr. Friedrich Schneider, University of Linz / AUSTRIA

The Morals of (Not) Paying Taxes and Receiving Benefits:

Economic, Institutional and Psychological Factors

Prof. Dr. DDr.h.c. Friedrich SchneiderDepartment of EconomicsJohannes Kepler University of LinzE-mail: [email protected]://www.econ.jku.at/schneider

Studien\TaxEvasion\2015\TaxMorale.ppt

Revised Version

July 7, 2015

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Content

1) Introduction

2) Some Theoretical Considerations about Tax (Benefit) Morale

3) What Shapes the Attitudes to (Not) Paying Taxes or Receiving (Unjustified) Benefits? The Case of Austria

4) What Shapes the Attitude to (Not) Paying Taxes? Evidence form the Multicultural European Countries Belgium, Spain and Switzerland

5) Local Autonomy, Tax Morale and the Shadow Economy

6) Summary and Conclusions

July 2015 Prof. Dr. Friedrich Schneider, University of Linz / AUSTRIA 2 of 47

(1) The puzzle of the economic theory of tax compliance is:

Why do people pay taxes?

Especially in the view of the low deterrence in most

countries, either because of a low intensity of control or

small penalties, taxpayers should evade more than they

actually do, i.e. compliance is much too high.

1. Introduction – 1.1 Why do people pay taxes?


Figure 1.1: “Do you justify cheating on taxes?”Results of the EVS 1990, 1999, 2008 for 5 countries in %



1990 1999/00

2008/09

1990 1999/00

2008/09

1990 1999/00

2008/09

1990 1999/00

2008/09

1990 1999/00

2008/09

Austria Denmark Finland Netherlands Sweden

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

85.9 84.277.3 77.4

84.5 88.5

67.377.6

87.7

67.6 71.481.0 77.5 77.4

81.3

3.5 4.99.7 7.3 3.5 2.7

13.8 9.53.4

9.6 9.14.8 8.3 5.9 6.5

never always

in P

roze

nt

Source: European Value Survey, longitudinal data file; May 2015.

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Figure 1.2: “Do you justify claiming state benefits you are not entitled to?”, Results of the EVS 1990, 1999, 2008 for 5 countries in %



1990 1999/00

2008/09

1990 1999/00

2008/09

1999/00

2008/09

1990 1999/00

2008/09

1990 1999/00

2008/09

Austria Denmark Finland Netherlands Sweden

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0 92.184.6

76.3

93.3 95.2 96.1

80.288.3 92.1 94.2 93.9 90.5

85.4 87.9

1.3 4.5 6.11.6 1.3 1.2 5.6 2.8 1.7 1.2 1.5 1.3 3.3 4.0

never always

in P

roze

nt


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(2) Two strands of arguments ((i) and (ii)) are put forward to

close the gap between theory and facts:

(i) On the one hand, the probability of being detected is

subjective.

First, individual perceptions of being caught when

cheating on taxes or benefits are much higher than

objective probabilities of detection.

Second, subjective probabilities of being caught exist in

the sense that the individual ability to evade taxes

strongly varies among subgroups of the population.



(ii) On the other hand, tax morale serves as an explanation

for high compliance rates in OECD countries.

Allingham and Sandmo (1972) argue that tax morale

residually explains the level of tax compliance

independent of tax policy and the behaviour of public

authorities.

This argument is consistent with the view that

fundamental social norms, (like religion or civic duty)

shape tax morale.



Three goals:

(1) If tax morale is used as an explanation why tax

compliance rates are so high, it is necessary to analyze

what shapes tax morale.

(2) This will be done for Austria (homogenous, mono-

cultural country) in part 3 and for Belgium, Spain and

Switzerland (non-homogenous, multi-cultural countries)

in part 4.

(3) In part 5 an additional analysis “explores” the relation

between local autonomy, tax morale and the shadow

economy.

1. Introduction – 1.2 Goals of this lecture


Intrinsic motivation (expressed as tax and benefit

morale) is therefore a key determinant in understanding

compliance behavior!

(1) Using Canadian data Torgler (2003) shows that tax

morale rises with financial satisfaction, age, patriotism,

trust in government, religiosity and deteriorates with

rising income.

(2) Torgler and Schneider (2004) emphasize the influence of

cultural differences in explaining tax morale and find

strong evidence for interactions between culture and

institutions.


2. Some Theoretical Considerations about Tax (Benefit) Morale – 2.1 Tax and benefit morale literature

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(3) Torgler and Schneider (2005) investigate tax morale in

Austria. Societal variables (e.g. perceived tax evasion,

patriotism, trust in legal system) are key determinants.

(4) To my best knowledge very few investigations of the

individual (taxpayer’s) decision on claiming unjustified

subsidies (e.g. by underreporting income) exists so far in

the economic literature; e.g. Orviska and Hudson (2003)

touch upon this issue.



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(5) From a theoretical point of view a subsidy is a negative

tax, but in empirical applications a separate investigation

is necessary, since

the theoretical determinants (e.g. probability of

detection) can differ, and

individuals may have different ‘opportunities’; some

may not have the opportunity to avoid/evade taxes,

but it may be feasible for them to claim unjustified

subsidies.



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Four different types of (reciprocity) norms, which depend on

government policies, tax authorities’ behaviour and state

institutions, influence tax and benefit morale:

(i) First, citizens pay their taxes if their fellow citizens

contribute their fair share.

In that respect traditional deterrence policy is rather

delicate, because the tax office can mistakenly forget to

audit tax cheaters (who additionally tell their friends and

relatives about it).


2. Some Theoretical Considerations about Tax (Benefit) Morale – 2.2 Key factors influencing tax and benefit morale

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Four different types of reciprocity norms (cont.):

Also, continued public discussion about the decline of tax

morale serves the same purpose: honest taxpayers get the

impression that they are the last to remain (so stupid) to

comply with the tax code.

(ii) Second, the government provides public services to

citizens in exchange for their tax payments.

If the fiscal balance between public goods and tax prices

is violated by setting the tax prices too high, citizens

think they have a justification for evading taxes.



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Four different types of reciprocity norms (cont.):

(iii) Third, citizens perceive their tax payments as

contributions to the ‘bonum commune’.

Hence, they are willing to honestly declare their income

even if they do not receive a full public good equivalent

to their tax payments (e.g. they are net contributors to

the welfare state).

(iv) Fourth, the way the tax office treats taxpayers in

auditing processes plays a crucial role.



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(ad iv)

Feld and Frey (2005) argue that taxpayers and tax authorities

are engaged in a psychological tax contract.

This contract about fiscal exchange (tax revenues for the

delivery of goods and services) assumes that taxpayers and

the tax authority treat each other as partners of a contract, i.e.

with mutual respect and honesty.

If tax administrations instead treat taxpayers as inferiors (or

servants) in a hierarchical relationship, this tax contract is

violated and citizens have good reason not to stick to their

contract and to evade taxes.



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(1) Determinants of benefit morale?

Taxpayers’/citizens’ attitude toward claiming

unjustified government benefits/subsidies.

(2) Determinants of tax morale?

Taxpayer’s attitude toward avoiding/evading taxes.

(3) Which impact do benefit and tax morale have on actual

behaviour (income)?

3. What Shapes the Attitudes to (Not) Paying Taxes or Receiving (Unjustified) Benefits? The Case of Austria – 3.1 Introduction: Three research questions


(i) Austrian data from the European Values Survey (1990 & 1999).

(ii) Respondents were asked to evaluate on a ten-point scale:

‘cheating on tax if you have the chance’ (…) ‘can always be justified, never be justified, or something in between.’ tax morale (1=none, 10=highest)

‘claiming state benefits which you are not entitled to’ (…) ‘can always be justified, never be justified, or something in between’. benefit morale (1=none, 10=highest)

(iii) N = 2,982 After cleaning data: N = 1,887 (N1990= 835,

N1999= 1,052).

3. What Shapes the Attitudes to (Not) Paying Taxes or Receiving (Unjustified) Benefits? The Case of Austria – 3.2 Data


(i) A system of two equations is applied:

Tax morale = α1 + β11 * benefit morale + β11 * income + Γ1 * Χ1 + ε1 (1)

Benefit morale = α2 + β21 * tax morale + β22 * income + Γ2 * Χ2 + ε2 (2)

(ii) If stated attitudes are translated in actual behavior, income is endogenous too, as simultaneity prevails.

(iii) Halla and Schneider (2005) instrument income with chief wage earners sex & job rank and the socio-economic status of the household.

3. What Shapes the Attitudes to (Not) Paying Taxes or Receiving (Unjustified) Benefits? The Case of Austria

– 3.3 Estimation of the determinants of tax & benefit morale


Table 3.1: 2SLS Estimation of Tax and Benefit Morale – Part 1


Variable Tax moralea) Benefit moralea)

Tax morale (index) - 0.463(0.220)**

Benefit morale (index) 0.607(0.282)**

-

Income (€ 100 p. m.) -0.024(0.013)*

0.002(0.013)

Age (years) -0.004(0.005)

0.011(0.003)***

Female (=1, dummy variable)

0.003(0.094)

0.122(0.077)

Married (=1, dummy variable)

0.182(0.105)*

-0.043(0.109)

School leaving age (years)

-0.022(0.013)*

0.001(0.013)

Employed (=1, dummy variable)

-0.083(0.130)

0.226(0.096)**

1999 (=1, dummy/shift variable)

0.141(0.180)

-0.480(0.090)***

Religious 0.136(0.053)***

-0.006(0.061)

α Standard errors are in parenthesis. *, ** and *** indicate a statistical significance at the 10-percent-level, 5-percent level and 1-percent level. Dummies for the nine Austrian provinces are included in each regression but not shown here. Base group is Vorarlberg.b P-value of Basmann‘s test of over-identifying restrictions of all instruments (Basmann, 1960).c P-value of Sargan‘s tests of overidentifying restrictions of all instruments (Sargan, 1958).Source: Martin Halla & Friedrich G. Schneider (2014).

Table 3.1: 2SLS Estimation of Tax and Benefit Morale – Part 2Variable Tax moralea) Benefit moralea)

Patriotic (1=not partriotic, 4=very patriotic)

0.157(0.101)

0.132(0.093)

Distrust legal system (1=no confidence, 5=complete confidence)

-0.137(0.054)**

-

Children - 0.073(0.032)**

Volunteer (=1, dummy variable)

- 0.136(0.083)*

Constant 3.410(2.151)

3.958(1.671)**

Observations 1,887 1,887Basmann Statisticb 0.237 0.584Sargan Statisticc 0.232 0.580

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(1) A negative significant coefficient of tax morale indicates

actual noncompliance behavior.

(2) A negative significant coefficient of benefit morale shows

actual claims of unjustified subsidies.

(3) In both cases a higher net wage is, ceteris paribus,

expected!


– 3.4 Estimation of impact on actual behavior


Income = α3 + β31*tax morale + β32*benefit morale + Γ3*Χ3 + ε3 (3)

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(4) Durbin-Wu-Hausman-Test for endogeneity of tax- &

benefit morale: P-value = 0.01

(5) Endogeneity prevails; we instrument for tax- and

benefit morale.

(6) Instruments are: Confidence in the legal system,

voluntary labor & children.

(7) Test(s) for over-identifying restrictions confirm the

instruments (e.g. P-value of Basmann‘s test = 0.62).



– 3.4 Estimation of impact on actual behavior

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Table 3.2: 2SLS Estimation on Income


Independent Variable Dependent Variable: Income

Tax morale 1.610(1.293)

Benefit morale -2.916**(1.309)

Chief wage earner‘s job rank

0.113(0.096)

Chief wage earner is female

-3.410***(0.475)

Socioeconomic status

4.382***(0.294)

1999 (=1, dummy variable)

-0.066(0.597)

Tirole -1.827***(0.728)

Constant 12.477(6.280)

α Standard errors are in parenthesis.*, ** and *** indicate a statistical significance at the 10-percent-level, 5-percent level and 1-percent level.Dummies for the nine Austrian provinces are included in each regression but, except for Tirole, they are not shown here as they are insignificant. Base group is Vorarlberg.b P-value of Basmann‘s test of over-identifying restrictions of all instruments (Basmann, 1960).c P-value of Sargan‘s tests of over-identifying restrictions of all instruments (Sargan, 1958). A different estimation strategy applying ordered probit estimations in both stages of the estimation of the tax- & benefit morale eqs. Deliver qualitatively very similar results.

Observations 1,887

Basmann Statisticb 0.622

Sargan Statisticc 0.620

Source: Martin Halla & Friedrich G. Schneider (2014).

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(1) No statistically significant impact of tax morale on household income!

(2) Statistically significant impact of benefit morale on household income! One point higher benefit morale reduces household income by 292 € p.m.

(3) Households with female chief wage earners have about 341 € lower income p.m.

(4) A higher socio-economic status (self reported, measured on four-point scale) is associated with 438 € more income p.m.



– 3.5 Results of the 2SLS estimation on income

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The focus lies on institutional differences within countries

rather than between countries.

(1) Switzerland has direct democratic institutions and three

main ethnic groups: German, French and Italian

speaking individuals.

(2) Belgium has two main linguistic regions (Flanders and

Wallonia).

(3) Spain is used to control for regions with a strong identity

such as the Basque Country, Catalonia, Galicia, and

Navarre.

4. What Shapes the Attitude to (Not) Paying Taxes? Evidence form the Multicultural European Countries Belgium, Spain and Switzerland

– 4.1 Introduction


4. What Shapes the Attitude to (Not) Paying Taxes? Evidence form the Multicultural European Countries Belgium, Spain and Switzerland– 4.2 Empirical model & the dependent variable TMi (tax morale of individual i)


ii

iiiiiii

CULT

SOCINSTINSTRELECONDEMTSTM

7

6543210

(1) Demographic independent variables (DEMi):

(i) AGE (four groups are built, 16-29 (reference group), 30-49, 50-64, 65+) (+);

(ii) GENDER (WOMAN, in the reference group man) (+); (iii) EDUCATION (+/-); (iv) MARITAL STATUS (+); (v) EMPLOYMENT STATUS (-); and(vi) RELIGIOSITY (RELi): CHURCH ATTENDANCE (+).

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(2) Economic and institutional independent variables:

(i) Properties of the tax system (TSi): individual tax rate,

audit probability and fine rate (the last two variables

only for Switzerland)) and economic variables ECONi

(income, financial satisfaction) → signs ambiguous!

(ii) The effects of the TAX RATE and the INCOME on tax

evasion are difficult to determine theoretically. They

depend on the individual’s risk preference and the

progression of the income tax schedule.



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(2) Economic and institutional independent variables:

(iii) A higher marginal tax rate makes tax evasion marginally more profitable, but a contrary effect works depending on the risk aversion of taxpayers. The results are influenced by the tax schedule and penalty structure → sign ambiguous!

(3) Political institution (INSTi) independent variables:

Direct democracy (+): The referendum is a strong restriction for the politicians or the legislature to act in their selfish interest; hence tax revenues are spent more in accordance with the preferences of the taxpayers, which increases tax morale, ceteris paribus.



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(4) Social/informal institutions and other socio-psychological independent variables (SOCINSTi): national pride (+)

and trust in public institutions (+).

(5) Culture/language differences (CULTi) independent

variables:

(i) If language acts as a restriction influencing an individual’s probability set, one can investigate whether it also influences individuals’ attitudes towards paying taxes (+);

(ii) Separatists tendencies such as observed in Spain may have a negative impact on the willingness to cooperate.



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(1) Individual data analysis, world and European value

surveys:

Belgium (EUS): 1999,

Spain (WUS): 1995, and

Switzerland (WVS): 1996

between 1000-1300 observations per country.

(2) Regression technique: Weighted ordered probit model to

analyse the ranking information of the scaled dependent

variable „Tax Morale“ TMi,j of individual i in country j.



– 4.3 Empirical Results

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Table 4.1: Overview of the empirical results; dependent variable: tax morale


VariablesCountries

Switzerland Belgium Spain

INSTITUTIONS AND CULTURE

Formal Institutions (direct democracy) + n.a. n.a.

Culture/LanguageSocial/Informal Institutions

Strong interaction between culture and direct democracy (coeff. Latin cantons * direct democracy is negative and highly statistically significant)

Flemish individuals have a lower tax morale than Walloons (not statistically significant)

Lowest tax morale in Navarre; strong increase of tax morale in the Basque Country between 1990 and 1995.

National pride Tendency: + + Tendency: +Trust in state's institutions + + +

Pro democratic attitudes n.a. + +TAX SYSTEMDeterrence

Fine Rate: -; (+): Audit probability: (+)

n.a. n.a.

Tax rate + (+/-) (+/-)

Table 4.1: Overview of the empirical results; dependent variable: tax morale (cont.)

July 2015 Prof. Dr. Friedrich Schneider, University of Linz / AUSTRIANotes: +: significant positive coefficient, (+), (-), positive, respectively negative coefficient sign without being significant, (±) positive and negative sign of the coefficient without being statistically significant. n.a. = not available.

VariablesCountries

Switzerland Belgium Spain

SOCIO-DEMOGRAPHIC AND SOCIO-ECONOMIC VARIABLES

Age

Tendency: + (robust and statistically significant for AGE 50-64, reference group: age < 30)

Tendency: + (robust and statistically significant for AGE 50-64)

(+/-)

Religiosity (Church att.) + + +Gender (women versus men) + + +

Education (+/-) (+/-) (-)

Marital status (married versus single) +

+ but not in all estimations statistically significant

(+)

Income/economic class Tendency: (-) (-) (+/-)Financial satisfaction + n.a. +Employment status (self-employed versus full-time employed)

(-) (-) (+/-)

I. Switzerland

(1) Higher direct democracy leads to higher tax morale.

(2) However one observes this effect only in the German speaking part of Switzerland, in the French and Italian the interaction variable (Dir.dem*Latin) is statistically significant with a negative sign!!

(3) Trust in gov. highly significant positive effect on tax morale.

(4) Deterrence factors no direct impact, coefficient of the fine rate negative and statistically significant → higher punishment crowds and tax morale.




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I. Switzerland (cont.)

(5) Women have higher tax morale than men.

(6) Old citizens (between 50 and 64) have a higher tax

morale than young.

(7) Married people have a higher one than singles.

(8) Religiosity has a significantly positive effect on tax

morale.




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II. Belgium

(1) No statistically significant difference among the cultural groups (Flemish and Francophone) with respect to tax morale.

(2) Pride and trust have a positive influence on tax morale.

(3) Aged, women, and married people have a high tax morale.

(4) Like in Switzerland church attendance leads to high tax morale.




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III. Spain

(1) Like in Belgium, no statistically significant influence of the different cultural regions, even not the Basque one, on tax morale.

(2) Opposite to Switzerland: higher autonomy does not lead to a higher tax morale in Navarre.

(3) Similar to Switzerland and Belgium, pride and trust lead to higher tax morale.

(4) Contrary to the findings in Switzerland and Belgium, church attendance and marriage has no effect on tax morale in Spain.




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The basic idea is to analyze the effects of institutions on tax morale. Specifically, the impact of federalism on tax morale and on the size of the shadow economy was investigated.

Key hypothesis: The more extensive the local autonomy, the higher, ceteris paribus, tax morale and the lower the size of the shadow economy.

The model:

5. Local Autonomy, Tax Morale and the Shadow Economy – 5.1 Theoretical considerations / hypothesis


ii

iiiCCCi

TR

CTLYTDDDLATM

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The question for the dependent variable tax morale for the

year 1999:

“Do you fell it is wrong or not wrong if a taxpayer does not

report all of his or her income in order to pay less income

taxes?”

Possible answers:

1 = not wrong,

2 = a bit wrong,

3 = wrong,

4 = seriously wrong.

5. Local Autonomy, Tax Morale and the Shadow Economy– 5.1 Theoretical considerations / hypothesis


DDC: The degree of direct democracy – six-point scale index

(1 = lowest and 6 highest degree of democratic participation

at the cantonal level)

LAC: local autonomy – 10 point scale (1= no autonomy and

10= very high autonomy; index by Ladner (1994)

Ti: Individual tax rate

Yi: the individuals’ household income

Tri: measures, using the ISSP data set, the confidence in the

courts and the legal system


5. Local Autonomy, Tax Morale and the Shadow Economy– 5.2 Data information and key independent variables

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Table 5.1: Tax morale and local autonomy

ISSP 1999 weighted ordered probit. Dependent variable: tax morale

Independent variables Coefficient Z-Stat. Marg.

(a) Institutions

Local Autonomy (LA) 0.144** 2.05 0.042

Degree of direct democracy (DD) 0.059** 2.02 0.017

(b) Individual Inc. Tax Rate (T) -0.005 -0.21 -0.001

(c) Demographic Factors (CTL)

Age 30-49 0.065 0.51 0.019

Age 50-64 0.063 0.40 0.018

Age 65+ 0.038 0.24 0.011

Woman 0.077 0.79 0.022

Education 0.034 1.49 0.010

(d) Marital Status (CTL)

Married/Living Together -0.066 -0.68 -0.019

Divorced -0.299 -1.52 -0.077

Separated 0.141 0.57 0.043

Widowed -0.092 -0.50 -0.026

(e) Economic Variables (Y)

Income 0.2e-04 0.38 0.4e-04

Table 5.1: Tax morale and local autonomy (cont.)

ISSP 1999 weighted ordered probit. Dependent variable: tax morale

Independent variables Coefficient Z-Stat. Marg.

(f) Employment Status (CTL)

Part Time Employed -0.155 -1.06 -0.043

Less Than Part Time 0.014 0.06 0.004

Unemployed 0.011 0.03 0.003

Student 0.395** 2.53 0.128

Retired 0.319** 2.20 0.100

At Home 0.146 0.82 0.044

Sick 0.196 1.27 0.061

(g) Religiosity

Church Attendance (CTL) 0.082*** 3.89 0.024

(h) Trust

Trust in Court and Legal System (TR)

0.096*** 3.27 0.028

Observations 1068

Prob > chi2 0.000

Pseudo R2 0.030

Notes: In the reference group are Ages 16–29, Man, Single, Full Time Employed. Marginal effect = highest tax morale score (4). Standard errors adjusted to clustering in 26 cantons*Significance level 0.05<p<0.10; **Significance level 0.01<p<0.05; ***Significance level p <0.01

(1) The results indicate that local autonomy and direct democracy are highly relevant to an understanding of why people cooperate with societies’ rules.

Institutions that respect the preferences of the citizens will have more support from the people than a state that acts as a Leviathan.

(2) High levels of local autonomy and direct democracy allow the expression of one’s own preferences and enhances identification with a state’s institutions.

This counteracts the tendency to be active in the shadow economy and increases the willingness to pay taxes.

(3) Results for the shadow economy: DD and LA are not statistically significant.


5. Local Autonomy, Tax Morale and the Shadow Economy– 5.3 Main Findings

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(1) The goal was to investigate what shapes individuals’

attitudes towards paying taxes in the countries Austria,

Belgium, Switzerland and Spain.

(2) For Austria societal variables (age, gender, marital

status) have a strong impact on tax morale as well as

“perceived tax evasion” and “pride”. From an

institutional standpoint “trust in the legal system” has a

strong impact on tax morale, too.

6. Summary and Conclusions


(3) In Switzerland, a multicultural country, a strong

interaction between culture and institutions (here direct

democracy) and tax morale is observed.

(4) In Belgium, also a multicultural country, only small or

no differences in tax morale between Flemish

inhabitants and Walloons can be observed.

(5) In Spain, the lowest tax morale has been found in

Navarre and not in the Basque Country.



(6) Direct democracy has a strong positive impact on tax

morale in Switzerland. Also pro democratic attitudes in

Belgium and Spain have a positive effect on tax morale.

(7) National pride and trust (in the legal system, the

government and the parliament) have a consistent

positive effect on tax morale in all four countries!

(8) Trust at the constitutional (trust in the legal system) and

the current politico-economic process level (trust in the

government and the parliament) are essential to a well-

functioning taxpayer society.



(9) Finally to conclude:

There are first and promising results to explain what shapes tax morale. Hence the puzzle, why people pay taxes, is partly solved.

Moreover, these results demonstrate that there are several factors (e.g. trust in the legal system, direct democracy, federalism) despite deterrence that could help to improve citizens’ willingness to pay taxes.

To sum up: the investigation of tax morale in these European countries brought new insights of the importance of institutional, sociological and societal variables.



Thank you very much for your attention!


Table A.1: Descriptive Statistics of the Austrian data 1990 and 1999

Appendix A1: Data


Variable Mean Std. Dev. Min Max

Tax morale* 8.92 1.86 1 10

Benefit morale*

9.09 1.66 1 10

Income (100 € p.m.)**

13.03 6.25 0 24.99

Spearman‘s Rho (tax morale, benefit morale) = 0.43

*Ten is the highest tax- & benefit morale.

** Income is given on a household basis (ten ranges). To account for inflation we assign the lower bound of each range.

Source: Martin Halla & Friedrich G. Schneider (2005).

48

Appendix A2: Further results of the European Value Survey


Austria Belgium Spain Switzerland0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

77.3

63.9

76.484.0

9.7 12.85.8 4.0

never always

in P

roze

nt


Figure A.1:“Do you justify cheating on taxes?”, Results of the EVS 2008/09 for Austria, Belgium, Spain and Switzerland in %

49

Figure A.2: “Do you justify claiming state benefits you are not entitled to?”, Results of the EVS 2008/09 for Austria, Belgium, Spain and Switzerland in %




Austria Belgium Spain Switzerland0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

76.383.2

71.6

91.8

6.1 4.38.7

2.4

never always

in P

roze

nt

50



1990

1999

2008

/09

1990

1999

2008

/09

1990

1999

2008

/09

2008

/09

Austria Germany Sweden Switzerland

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

85.9 84.277.3 76.7 78.7

85.177.5 77.4

81.3 84.0

3.5 4.99.7 8.1 6.7 2.9

8.3 5.9 6.5 4.0

never always

in P

roze

nt


Figure A.3:“Do you justify cheating on taxes?”, Results of the EVS from 1990-2008 for Austria, Germany, Sweden and Switzerland in %

51



1990

1999

2008

/09

1990

1999

2008

/09

1990

1999

2008

/09

2008

/09

Austria Germany Sweden Switzerland

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0 92.184.6

76.3

87.3 87.1 84.790.5

85.4 87.9 91.8

1.3 4.5 6.1 3.6 4.3 3.5 1.3 3.3 4.0 2.4

never always

in P

roze

nt


Figure A.4: “Do you justify claiming state benefits you are not entitled to?”, Results of the EVS from 1990-2008 for Austria, Germany, Sweden and Switzerland in %

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july 2015 prof. dr. friedrich schneider, university of linz / austria the morals of (not) paying...

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