It’s All About Tax RatesAn Empirical Study of Tax Perception

In this paper we apply conjoint analysis to study the influence of changes in thetax rate and the tax base on the perceived tax burden. Our results show that themajority of individuals do not make rational tax decisions based on the actual taxburden, but rather use simple decision heuristics. This leads to the importance ofthe tax rate being significantly overestimated and the importance of the tax basebeing significantly underestimated. Furthermore we determine framing effectsand show that under specific assumptions, a rise in the actual tax burden can leadto a electoral success.