Abstract
The essay outlines selected psychological attitudes towards taxes. We argue that the application of behavioural economics methodology to taxation is more than justified because, in their decision-making, taxpayers seem to be influenced by the perception of taxes rather than solely by their existence. We also discuss several real life examples of how tax salience affects the perception of taxes in various settings. The conclusion points out that the tax non-salience contributes to fiscal illusion, which allows governments to grow.
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Notes
The point in which the Laffer curve depicting the relationship between tax rates (x axis) and tax revenues (y axis), reaches its maximum. Taxation revenues beyond that point decrease even though the tax rates are rising.
Further Reading
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Saez, E. 2010. Do Taxpayers Bunch at Kink Points? American Economic Journal: Economic Policy, 2(3), 180–212. doi:10.1257/pol.2.3.180.
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Houdek, P., Koblovský, P. Where is My Money? New Findings in Fiscal Psychology. Soc 52, 155–158 (2015). https://doi.org/10.1007/s12115-015-9873-7
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DOI: https://doi.org/10.1007/s12115-015-9873-7