Persistence or Convergence? The East—West Tax-Morale Gap in Germany

Abstract

This paper studies differences in tax morale attitudes between East and West Germany using multiple recent data sets. Contrary to previous 1990s evidence, but in line with recent studies on an east-west mentality gap, we find a persistent higher tax morale in East Germany and no indication of convergence over time. Distinguishing between region of living and birth and periods of within-country migration reveals that the East Germans who stayed determine the results and that migration vanishes differences. Regional economic heterogeneity of tax revenue transfers cannot explain the results. We find a framing effect on the tax morale gap with questions phrasing tax paying as the duty of a good citizen. This result suggests no gap of tax morale with moral reasoning related to the social order and citizenry.Keywords -tax morale, German reunification, east-west differences, convergence, moral reasoning JEL classification: H26, H73 Persistence or Convergence? The East-West Tax Morale Gap in GermanyAbstract This paper studies differences in tax morale attitudes between East and West Germany using multiple recent data sets. Contrary to previous 1990s evidence, but in line with recent studies on an east-west mentality gap, we find a persistent higher tax morale in East Germany and no indication of convergence over time. Distinguishing between region of living and birth and periods of within-country migration reveals that the East Germans who stayed determine the results and that migration vanishes differences. Regional economic heterogeneity of tax revenue transfers cannot explain the results. We find a framing effect on the tax morale gap with questions phrasing tax paying as the duty of a good citizen. This result suggests no gap of tax morale with moral reasoning related to the social order and citizenry.

Tax Compliance and Data: What Is Available and What Is Needed

“…Moreover, their results confirm that findings from a cross‐cultural experiment by Alm, Sanchez and De Juan (1995) on social norm differences between the United States and Spain still hold when using survey data. Comparisons also exist of the adjustment processes of East compared to West Germans following reunification (Torgler ; Feld, Torgler and Dong ; Möhlmann ), of the Spanish after the death of Francisco Franco in 1970 (Martinez‐Vazquez and Torgler ) and of the tax morale differences between Western and Eastern Europe (Torgler ). Other studies examine the dynamic changes in Russia during the transition decade of the 1990s (Alm, Martinez‐Vazquez and Torgler ) or the implications of joining the European Union (Torgler ).…”

“…For those interested specifically in Europe, the German General Social Survey might be a possibility, although to date only a few studies use it (for example, Korndörfer, Krumpal and Schmukle and Möhlmann ). One reason may be that the survey does not ask the same questions from wave to wave, although those it does ask are worth exploring in more depth.…”

On the Origin and Composition of the German East-West Population Gap

“…The human capital outcomes studied are labor productivity(Fuchs-Schündeln and Izem, 2012) and educational attainment(Fuchs-Schündeln and Masella, 2016). The list of social behavior and attitudes comprises political preferences(Alesina and Fuchs-Schündeln, 2007), trust(Rainer and Siedler, 2009), solidarity(Brosig-Koch et al, 2011), gender attitudes(Bauernschuster and Rainer, 2012), self-reliance and entrepreneurship(Bauernschuster et al, 2012), honesty(Ariely et al, 2014), conspicuous consumption(Friehe and Mechtel, 2014), and tax morale(Möhlmann, 2014). Papers using more aggregated data study the effect on regional economic performance(Abadie et al, 2015;Boltho et al, 2018), and migration (see footnote 5).4 There are three notable exceptions.…”

Behavioral Taxation: Opportunities and Challenges

“…Such data have been used to explore cross-cultural or institutional differences between countries, while also linking to experimental evidence or within country differences, examining countries such as Switzerland, Belgium, or Spain who provide within country cultural and institutional heterogeneity (Torgler 2005a, Torgler and. Such data can also be used to explore interesting historical case studies such as the adjustment process after the German Reunification, which can be seen as a natural experiment (Torgler 2003a;Feld, Torgler and Dong 2008;Möhlmann 2014), Russia during its transition (Alm, Martinez-Vazquez and Torgler 2006), Spain after the Franco period (Martinez-Vazquez and Torgler 2009) or implications of joining the European Union (Torgler 2012). Thus, in the future more studies connecting it to historical or cultural contexts can be investigated, although they can be seen as "narrative" or descriptive studies, as many unobservable factors may play a role that is hard to control for with such survey data.…”