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Taxes and Benefits: Two Distinct Options to Cheat on the State?

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  • Halla, Martin

    (WU Vienna University of Economics and Business)

  • Schneider, Friedrich

    (University of Linz)

Abstract

While there is an extensive literature on tax evasion a further aspect of cheating on the state, namely benefit fraud, has gained relatively modest attention in the economic literature. This paper seeks to fill this gap. We explore differences between benefit fraud and tax evasion due to differing social norms. We define the concepts of benefit morale and tax morale as the motivation to abstain from cheating on the state via these two offenses. Our multilevel analysis, based on a large micro data set of respondents from 29 OECD member countries, shows that benefit morale and tax morale have different determinants at an individual-level and respond differently to fiscal policy measures.

Suggested Citation

  • Halla, Martin & Schneider, Friedrich, 2008. "Taxes and Benefits: Two Distinct Options to Cheat on the State?," IZA Discussion Papers 3536, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp3536
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    More about this item

    Keywords

    tax morale; multilevel analysis; welfare fraud; benefit fraud; tax evasion; tax; social norms; subsidies; benefit morale;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets
    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values

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