Do People Really Want a Simple Tax System? Evidence on Preferences Towards Income Tax Simplification

Abstract

Using new survey and experimental data for a representative sample of the German population, we study preferences for tax simplification. The general wisdom seems to suggest that most tax systems are overly complex and that tax simplification is generally desirable. Consistent with this general wisdom, we find that more than 90% of our sample believe that the tax system needs to be simplified. However, there also are efficiency and equity arguments in support of a certain degree of tax complexity and it is puzzling why tax systems remain highly complex despite the conventional view in favor of more simplification. The main purpose of our study then is to investigate if the high support for tax simplification is driven by a lack of awareness about the trade-offs behind simple and complex tax systems. Our data show that the support for simplification decreases as we randomly provide economic arguments against simplification and as we ask respondents if the tax system should account for specific differences in living situations (such as costly care of elderly family members). Overall, our findings suggest that the high support for simpler taxes is to some extent driven by a lack of awareness about the implications of tax simplification.

The Impact of Performance Improvement of the Tax System on the Economic Growth of Developing Countries Based on the Experience of the European Union

“…As you already know, in different countries of the world the concept of good governance is defined in different ways, although all definitions are based on common premises (Brown, 1991;Huang, 2018;Brezina et al, 2021). For example, countries such as Switzerland and Norway have seen results over time in improving the relative efficiency of tax systems, along with a growing convergence in tax simplification trends (Nguyen T. et al, 2021) The transition to a constitutional mode of government was everywhere accompanied by the building of a democratic state based on new values (Afonso, 2006, Alshrouf, 2019Blesse et al, 2019). In this sense, the role of the highest bodies of state control has always been to ensure that these values are respected and to foster greater citizen participation in governance (Koval et al, 2019;Belmonte-Martin et al, 2021, Polzer, 2021.…”

Corporate tax - a new paradigm is needed! -II. A new global value-added tax is needed instead of a corporate tax

“…Simple tax type: Simple taxes in tax systems have significant support in society and a higher willingness to pay taxes Blesse et al, (2019). Perhaps the most important feature of the new global tax is that it is simple.…”

The Relation between Tax Complexity and Foreign Direct Investments: Evidence Across Countries

“…Hence, tax complexity affects the profit of a firm according to equation (2) and therefore, also the likelihood of investing into a specific country according to equation (5). Since tax complexity cannot only be costly but also beneficial for firms (Krause 2000;Carnes and Cuccia 2001;Galli and Profeta 2009;Barton 2011;Blesse et al 2019;Laplante et al 2019), it is difficult to provide a clear prediction on the association between tax complexity and the location probability ex ante.…”

“…We argue that it also provides firms with benefits, such as tax planning opportunities (Krause 2000;Laplante et al 2019) or increased tax fairness, for example, through tailored tax regulations (Cuccia and Carnes 2001;Galli and Profeta 2009;Barton 2011;Blesse et al 2019). Which of these opposing effects dominates is not clear.…”

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