Testing the Mill hypothesis of fiscal illusion

Sausgruber, Rupert; Tyran, Jean‐Robert

doi:10.1007/s11127-005-3992-4

Cited by 112 publications

(39 citation statements)

References 21 publications

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“…They have concluded that taxes without salience will not be perceived correctly. In two experimental studies, Sausgruber and Tyran (2005, 2008) have observed a similar result. Subjects do not perceive their own tax burden correctly if the other market side has to pay the tax, and the tax can thus be seen as non‐salient to them.…”

Section: Introductionmentioning

confidence: 53%

Net Wage Illusion in a Real‐Effort Experiment*

Fochmann

Weimann

Blaufus

et al. 2013

Scandinavian J Economics

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In a controlled laboratory experiment, subjects had to fold letters in order to earn money. While the net income per letter was the same in the three treatments, the gross income varied and the tax rate was 0, 25, and 50 percent. Although work incentives should be the same in all treatments, subjects worked harder and longer when they were taxed. We conclude that this is because of a net wage illusion effect. The existence of this effect demonstrates that not only are the tax rate and the tax base of importance for work incentives, but the perception of a tax is also important.

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Section: Introductionmentioning

confidence: 53%

Net Wage Illusion in a Real‐Effort Experiment*

Fochmann

Weimann

Blaufus

et al. 2013

Scandinavian J Economics

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“…Furthermore, [27][28][29] find that the consumption of goods can be biased by a tax misperception. Sausgruber and Tyran [30,31] reveal in different laboratory experiments that voting behavior is affected by a distorted tax perception. In the literature, some determinants influencing tax perception are identified.…”

Section: Decision Taskmentioning

confidence: 99%

The Effect of Straight-Line and Accelerated Depreciation Rules on Risky Investment Decisions—An Experimental Study

Ackermann

Fochmann

Wolf³

2016

IJFS

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Abstract:The aim of this study is to analyze how depreciation rules influence the decision behavior of investors. For this purpose, we conduct a laboratory experiment in which participants decide on the composition of an asset portfolio in different choice situations. Using an experimental setting with different payment periods, we show that accelerated compared to straight-line depreciation can increase the willingness to invest as hypothesized by theory. However, this expected behavior is only observed in a more complex environment (with a subsidy) and not in a less complex environment (without a subsidy).

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“…Sausgruber and Tyran (2005) study the perception and effects of direct and indirect taxes. They find that the tax burden associated with an indirect tax is underestimated, which is not the case with a corresponding direct tax.…”

Section: Related Literaturementioning

confidence: 99%

The Non-Equivalence of Labor Market Taxes: A Real-Effort Experiment

Weber

Schram

2013

SSRN Journal

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Under full rationality, a labor market tax levied on employers and a corresponding income tax levied on employees are equivalent. With boundedly rational agents, this equivalence is no longer obvious and the different reactions to these two taxes become important for policy making, political economics, and optimal taxation theory. In a real effort laboratory experiment, we study the differential effects of the two taxes on preferences concerning the size of the public sector, subjective well-being, labor supply, and on-the-job performance. Our findings suggest that employer-side taxes induce preferences for a larger public sector. In addition, subjective well-being is higher when the taxes are levied on employers while labor supply is lower, at least at the extensive margin. We discuss three mechanisms that may underlie these results.JEL classification: C91, H22, H30

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Testing the Mill hypothesis of fiscal illusion

Cited by 112 publications

References 21 publications

Net Wage Illusion in a Real‐Effort Experiment*

Net Wage Illusion in a Real‐Effort Experiment*

The Effect of Straight-Line and Accelerated Depreciation Rules on Risky Investment Decisions—An Experimental Study

The Non-Equivalence of Labor Market Taxes: A Real-Effort Experiment

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