The impact of tax evasion by the rich on the willingness to pay taxes

Abstract

We test the hypothesis that tax evasion by the rich has a disproportionate effect on preferred tax rates. We conduct a survey experiment in Mexico City, informing respondents about the high levels of tax evasion by the rich and asking them what tax rate they would be willing to pay if the rich or the poor were to pay all their taxes. Respondents react more strongly to tax evasion by the rich. Our results suggest that policymakers could strengthen tax morale most effectively by selectively targeting the rich.