Abstract
PurposeThe purpose of this paper is to investigate the relationship of inheritance tax behavior with normative value principles and factors found relevant for income tax compliance. Also, it examines the influence of affectedness and earmarking on inheritance tax compliance. Furthermore, it compares two countries similar in tax morale, tax culture as well as dominant normative value principles, Austria and Germany, of which one – Germany – levies inheritance taxes and the other – Austria – is debating its reintroduction.Design/methodology/approachA two (affected vs nonaffected) by two (Austria vs Germany) by two (inheritance tax vs stock profit tax) by three (no earmarking vs social justice earmarking vs equality of opportunity earmarking) experimental online questionnaire was conducted with 296 Austrians and 230 Germans.FindingsNormative value principles and other socio-psychological variables play an important role concerning inheritance tax behavior. Affectedness does not influence inheritance tax compliance. Earmarking inheritance tax to projects corresponding to these value principles increases inheritance tax compliance in the Austrian sample and could represent a measure to increase inheritance tax compliance in countries implementing inheritance tax or increasing inheritance tax.Originality/valueThis study draws a comprehensive picture of the socio-psychological variables relevant to inheritance tax behavior and tests the effect of earmarking as a policy measure to increase inheritance tax compliance.
Highlights
In light of the ever increasing skewedness of the distribution of private wealth, with 1 percent of the world’s population owning 48 percent of all private wealth (Hardoon, 2015), discussions about policy measures to reduce this inequality are of high sociopolitical relevance
Regarding the relationship of inheritance tax behavior with normative value principles, attitude toward inheritance tax, trust in the state, general tax morale/compliance, participation, attitude toward earmarking, interest in and knowledge of inheritance tax, and political orientation, the results in the Austrian sample show significant negative correlations of inheritance tax behavior with the family principle (r 1⁄4 −0.38, p o0.01) and political orientation (r 1⁄4 −0.42, p o0.01), meaning that participants affiliating with the family principle and participants with a right-wing political orientation paid less inheritance tax
This study has investigated the relationship between inheritance tax compliance and the normative value principles proposed by Beckert (2008a) and socio-psychological variables that were found relevant for tax compliance in previous tax compliance research
Summary
In light of the ever increasing skewedness of the distribution of private wealth, with 1 percent of the world’s population owning 48 percent of all private wealth (Hardoon, 2015), discussions about policy measures to reduce this inequality are of high sociopolitical relevance. In this discussion the taxation of intergenerational transfers of wealth represents a core topic, as inheritances play a pivotal economic and societal role in relation to the concentration of wealth within countries, accounting for 40 percent of the wealth inequality in Austria and Germany (Arbeiterkammer, 2015). The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode
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