Outgroup Tax Compliance and Tax Morale

• In Event: Poster Session: Studies in Comparative Political Development

Abstract

Overall, we know that information about general levels of tax evasion affects individuals’ willingness to comply. Yet, we know little about how differently people react to tax evasion by outgroup individuals. We argue that obtaining information about the tax evasion behavior of an outgroup member will reduce respondents’ tax morale more than information about an ingroup individual evading. To empirically investigate our theoretical expectations, we conducted a face-to-face survey experiment in Turkey, a country with a salient ethnic cleavage. We employ various experimental treatments aimed at influencing individuals' perceptions of tax evasion within different groups. Specifically, we employ a factorial survey experiment, where participants are presented with a vignette describing the characteristics of a tax evader or complier. Each vignette is constructed with four manipulated variables: (1) the individual's tax compliance status, whether they are a tax evader or tax complier, (2) their access to high-quality public goods or lack thereof, (3) their economic status, such as whether they are a upper middle-income business owner or a lower middle-income business owner; and (4) ethnic identity, Kurdish or Turkish. Our main findings reveal that the tax evasion treatment decreases tax morale and results in worse individual assessments of the hypothetical individual. In addition to this, out-group evasion amplifies these effects. In other words, tax evasion by an outgroup is more heavily penalized compared to tax evasion by an ingroup individual.

Authors

• Yusuf Magiya, New York University Abu Dhabi

• Giuliana Pardelli, New York University Abu Dhabi