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Where Do My Tax Dollars Go? Tax Morale Effects of Perceived Government Spending

Author

Listed:
  • Matias Giaccobasso

    (VATT Institute for Economic Research)

  • Brad Nathan

    (Rutgers University)

  • Ricardo Perez-Truglia

    (University of California, Los Angeles)

  • Alejandro Zentner

    (University of Texas at Dallas)

Abstract
Do perceptions about government spending affect willingness to pay taxes? We test this hypothesis with a natural field experiment that focuses on the allocation of property taxes to public schools. Our results show that taxpayers often misperceive the destination of their tax dollars. By introducing shocks to households’ perceptions via an information-provision experiment, we find that perceptions of how tax dollars are used significantly affect the probability of filing a tax appeal. Moreover, the effects are consistent with reciprocal motivations: individuals are more willing to pay taxes if they believe that the government services funded by those taxes will provide greater personal benefit.

Suggested Citation

  • Matias Giaccobasso & Brad Nathan & Ricardo Perez-Truglia & Alejandro Zentner, 2024. "Where Do My Tax Dollars Go? Tax Morale Effects of Perceived Government Spending," Working Papers 28, Finnish Centre of Excellence in Tax Systems Research.
    • Handle: RePEc:fit:wpaper:28
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Sebastian Blesse & Philipp Lergetporer & Justus Nover & Katharina Werner, 2023. "Transparency and Policy Competition: Experimental Evidence from German Citizens and Politicians," Rationality and Competition Discussion Paper Series 387, CRC TRR 190 Rationality and Competition.
    2. Hoy,Christopher Alexander, 2022. "How Does the Progressivity of Taxes and Government Transfers Impact People’s Willingnessto Pay Tax ? Experimental Evidence across Developing Countries," Policy Research Working Paper Series 10167, The World Bank.
    3. Anne Brockmeyer & Francisco Garfias & Juan Carlos Suárez Serrato, 2024. "The Fiscal Contract up Close: Experimental Evidence from Mexico City," CESifo Working Paper Series 11270, CESifo.
    4. Patricia Gil & Justin Holz & John List & Andrew Simon & Alejandro Zentner, 2023. "Toward an Understanding of Tax Amnesties: Theory and Evidence from a Natural Field Experiment," Natural Field Experiments 00772, The Field Experiments Website.

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    More about this item

    Keywords

    taxes; protest; public services; education; redistribution;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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