Tax Burden Transparency

Much of the prior work on tax-induced behavior and effects of taxation assumes that individual and firm decision-makers can build rational expectations about the tax consequences of their choices. Maiterth and Sureth-Sloane question this assumption by studying tax-burden transparency. They analyze the determining factors of tax misperception and how these translate into the decision-making of individuals and firms. They also study how the lack of transparency about one’s tax burden and the tax burden of others biases tax system preferences. They exploit (experimental) survey data, archival data from financial statements, data from the German Business Panel (C01), and tax administrative data. Their results help explain the drivers and consequences of missing (regulatory) tax transparency and provide orientation for how to attenuate misperception.

  • Forschungsfrage

    How transparent is the tax burden to individuals, firms, regulators, and other stakeholders, and how does the (lack of) tax burden transparency affect decision-making?

  • Motivation zur Forschung

    Taxes play an important role in decision-making for individuals and firms. However, decision-makers might be subject to misperception, for example, induced by lacking regulatory transparency. Therefore, their decisions might be distorted by incorrect beliefs about tax burdens and tax burden distributions. Tax regulations may be misperceived due to the variety and complexity of tax information sent by tax regulators via tax law and guidelines. Receivers of this information, however, might not be able to process it accurately.

  • Forschungsprogramm

    We investigate the drivers and consequences of tax misperception. The literature focuses mainly on individuals’ misperception of taxes. We study misperception of income, other individual level taxes, and – since research on firms’ tax burden misperception is largely missing – firms’ misperception. Further, we investigate how (a lack of) tax burden transparency affects firms’ decision-making and whether stakeholders, for example, regulators and NGOs, misperceive firms’ tax burdens.

  • Research Contribution

    Our results enhance the understanding of shortcomings in regulatory tax transparency and its implications for tax misperception by individuals, firm owners, managers, and other stakeholders, and how these deficiencies could affect tax policy and the behavior of economic agents. Understanding the drivers and consequences of tax misperception helps us to identify measures to reduce misperception and tax system inefficiencies.

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Beteiligte Institutionen

Die Hauptstandorte vom TRR 266 sind die Universität Paderborn (Sprecherhochschule), die HU Berlin und die Universität Mannheim. Alle drei Standorte sind seit vielen Jahren Zentren für Rechnungswesen- und Steuerforschung. Hinzu kommen Wissenschaftler der LMU München, der Frankfurt School of Finance and Management, der Goethe-Universität Frankfurt, der Universität zu Köln und der Leibniz Universität Hannover, die die gleiche Forschungsagenda verfolgen.