Testing the Mill hypothesis of fiscal illusion

Autor(en)

Rupert Sausgruber, Jean-Robert Tyran

Abstrakt

According to the “Mill hypothesis”, the tax burden from indirect taxation is underestimated because indirect taxes are less “visible” than direct taxes. We experimentally test the Mill hypothesis and identify tax framing as a cause of fiscal illusion. We find that the tax burden associated with an indirect tax is underestimated, whereas this is not the case with an equivalent direct tax. In a referendum to tax and redistribute tax revenue, fiscal illusion is found to distort democratic decisions and to result in “excessive” redistribution. Yet, voters eventually learn to overcome fiscal illusion.

Organisation(en)

Institut für Volkswirtschaftslehre, Wiener Zentrum für Experimentelle Wirtschaftsforschung

Externe Organisation(en)

Leopold-Franzens-Universität Innsbruck

Journal

Public Choice

Band

122

Seiten

39-68

Anzahl der Seiten

30

ISSN

0048-5829

DOI

https://doi.org/10.1007/s11127-005-3992-4

Publikationsdatum

2005

Peer-reviewed

Ja

ÖFOS 2012

502038 Steuerlehre, 502024 Öffentliche Wirtschaft, 502045 Verhaltensökonomie

Link zum Portal

https://ucris.univie.ac.at/portal/de/publications/testing-the-mill-hypothesis-of-fiscal-illusion(ee1ea69d-81df-4c80-b905-95f0cb273483).html