Future Orientation and Taxes: Evidence from Big Data

Abstract

The paper analyses whether various aspects of a country’s tax system have a positive or negative influence on individuals’ attitudes towards the future. These attitudes are measured by an analysis of Google search queries derived from Google Trends which allow constructing an online future-orientation index for a sample of 58 countries. There results of this analysis indicate that capital gains taxes and value added taxes discourage future-oriented behaviour. Also, high personal income tax rates at the lowest income brackets discourage, whereas – surprisingly – the top marginal rates could positively influence an individual’s future orientation. The paper contributes to existing research in three ways: First, it expands the existing tax literature by providing evidence that taxes can influence very fundamental personal values, such as individuals’ general attitudes towards their future. Second, it contributes to a vast body of cross-cultural studies on future orientation by introducing tax law. Third, by using Internet search patterns the paper introduces these large, automatically gathered data sets into scientific tax research, thereby opening the possibility for further research opportunities.