The Influence of Tax Labeling and Tax Earmarking on the Willingness to Contribute – A Conjoint Analysis

We apply conjoint analysis to study the influence of tax labeling and tax earmarking onGerman taxpayers’ willingness to contribute. From a survey based sample we show thatlabeling and earmarking effects can substantially increase participants’ willingness tocontribute, which results in a considerable deviation from a pure consumption maximizingbehavior. Furthermore, we give an explanation for this effect regarding socio-demographicattributes of German taxpayers. These results explain the variety in tax labels and provideimplications for tax policy regarding further reforms of the tax and contribution system:“Labeling” and “earmarking” of contributions are important instruments in “selling” policiesand increasing tax revenue.