Outgroup Evasion and Attitudes Towards Taxation
P5-S108-1
Presented by: Yusuf Magiya
The provision of public goods is commonly viewed as more challenging in diverse societies because people are believed to be less willing to pay taxes to finance a public sector that benefits other groups, thus leading to lower tax morale. In this study, we investigate the idea that this negative association may result from individuals' reluctance to bear the economic cost for other groups when they think these groups do not contribute their fair share. We conduct a survey experiment in Turkey to assess whether people react more strongly to anecdotal reports of tax evasion by members of an outgroup rather than an ingroup. Additionally, we examine whether majority group's attitudes are more sensitive to tax evasion by minority group members than the reverse scenario. Our findings reveal no significant influence of the outgroup or minority status of the tax evader on the tax attitudes of respondents. However, we observe that individuals' tax morale drops significantly when exposed to reports of evasion among ingroups. This suggests that the negative association between diversity and tax revenues may not stem primarily from inter-group dynamics, such as a direct negative reaction to the behavior of minority groups. Instead, the results highlight the importance of intra-group norms, where individuals' tax morale is more susceptible to erosion due to the perceived non-compliance of their own group members.
Keywords: Tax morale, survey experiment, political economy, tax compliance