Progressive Taxation and Tax Morale

As the link between tax compliance and tax morale is found to be robust, finding thedeterminants of tax morale can help to understand and fight tax evasion. In this paper weanalyze the effect of progressive taxation on tax morale in a cross-country approach – whichhas not been investigated before. Our theoretical analysis leads to two testable predictions.First, an individual’s tax morale is higher, the more progressive the tax schedule is. Second,the impact of tax progressivity on tax morale is declining in income. In our empirical analysis,we make use of a unique dataset of tax progressivity measures and follow most of the taxmorale literature by employing the World Values Survey to measure tax morale. Controllingfor a wide range of variables, we confirm both hypotheses in our empirical analysis...