Tax Morale and Optimal Taxation

We study experimentally how taxpayers choose between two taxregimes to fund a public good. The first-best tax regime imposes ageneral, distortion-free income tax. However, this tax cannot be enforced.The second-best alternative supplements the income tax by a specificcommodity tax. This tax cannot be evaded but distorts optimal consump-tion choices, instead. The result is that a large majority of subjects preferthe general income tax regime. The bulk of votes is consistent with actualpayoffs. We isolate tax morale as cause for payoffs above theoreticalpredictions.