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Opting-out of the social contract: Tax morale and evasion

Castaneda, N; Doyle, D; Schwartz, C; (2019) Opting-out of the social contract: Tax morale and evasion. Comparative Political Studies 10.1177/0010414019879956. (In press). Green open access

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Abstract

We examine the individual-level determinants of tax morale in low-capacity states, specifically Latin American countries, where the social contract is often perceived as fractured. We argue that individuals in such states perceive the social contract as an agreement to which they can opt in or opt out. Those who choose to opt out prefer to substitute state-provided goods for private providers, rather than pay for public goods through taxes or free-ride to receive those goods. Through a list experiment conducted in Mexico City, we demonstrate that willingness to evade taxes is highest when individuals have stepped outside of the social contract. More traditional indicatorsof reciprocity - such as socio-economic status and perceptions of corruption -are not significant. We bolster our experimental results with observational data from seventeen Latin American cities; those with access to employer-sponsored insurance are more willing to evade tax.

Type: Article
Title: Opting-out of the social contract: Tax morale and evasion
Open access status: An open access version is available from UCL Discovery
DOI: 10.1177/0010414019879956
Publisher version: https://doi.org/10.1177/0010414019879956
Language: English
Additional information: This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
Keywords: Tax morale, Tax evasion, Fiscal contract, Tax compliance
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Institute of the Americas
URI: https://discovery.ucl.ac.uk/id/eprint/10076912
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