Werner W. Pommerehne

Tax Rates, Tax Administration and Income Tax Evasion in Switzerland

This paper contains an empirical analysis of income tax noncompliance in Switzerland, based on the standard model of tax evasion. Noncompliance is found to be positively related to the marginal tax burden and negatively to the probability of audit, though the latter impact is only weak. There is no evidence of a significant deterrent effect of the penalty tax. The extended model reveals that noncompliance is positively related to inflation. Finally, noncompliance is significantly lower when citizens/taxpayers have direct control over government budgets, whereas the opposite holds when there is no such control.

Institutional approaches to public expenditure: Empirical evidence from Swiss municipalities

(1) To provide an empirical comparison of the traditional regression approach using average per capita income with the median voter approach to public expenditure. (2) To explicitly take account of the institutional aspects of collective decisionsshowing that differences in institutions signilicantly affect outcomes. (3) To take account of the ideological preferences of political parties and the influence of public bureaucracy where the possibility of democratic influence on public expenditure is weaker.

On the fairness of pricing -- An empirical survey among the general population

Abstract A random survey reveals that a rise in price to cope with a situation of excess demand is considered unfair by 80% of the respondents. Pricing is considered less unfair as a decisionmaking procedure under recurrent situations than as a device to ration demand in a unique, fixed supply situation. Results contrasting with conventional economic theory are that traditional and administrative procedures are much preferred to pricing, and that an enlarged opportunity set leads to an even more negative evaluation of pricing. This may be explained by introducing ethical (‘just price change’) considerations into positive analysis.

Tax harmonization and tax competition in the European Union: Lessons from Switzerland

Abstract This paper presents empirical evidence on individual income tax competition in Switzerland. Tax competition has some influence on the spread of people with high income over the cantons, and it is partly capitalised in dwelling rents. However, it neither leads to a collapse of public good supply nor makes redistribution by the fiscal authorities impossible. Thus, if tax competition works well in Switzerland there is no reason why it should have disastrous effects in a future European Union.

Free Riding and Collective Action: An Experiment in Public Microeconomics

The well-known free-rider hypothesis is examined experimentally to see (i) whether individuals behave systematically as free riders when systematic incentives to do so are created, and (ii) the extent to which free riding actually occurs. Though the experiments participants behaved in accordance with the hypothesis, the quantitative extent to which such behavior occurred was rather modest. From this it may be concluded that the free-rider hypothesis as presently stated indicates an incompleteness in standard public microeconomics rather than providing a description of the real world.

Economics Indoctrination or Selection? Some Empirical Results

The difference in attitudes between students of economics and the average population is attributed to the characteristics of those who chose to study economics and not the education process.

Has the shadow economy grown in Germany? An exploratory study

ZusammenfassungHat die Schattenwirtschaft in der Bundesrepublik Deutschland zugenommen ? — Nach einer Diskussion der wichtigsten Bestimmungsfaktoren einer Schattenwirtschaft wird deren Entwicklung in der Bundesrepublik Deutschland für die Periode 1960—1978 quantitativ erfa\t. Die verschiedenen Determinanten werden gewichtet, und ihr Einflu\ auf die Grö\e und Entwicklung der Schattenwirtschaft wird mit Hilfe von SensitivitÄtsanalysen untersucht. Die Ergebnisse aller SensitivitÄtsrechnungen lassen vermuten, da\ die Schattenwirtschaft in Deutschland wÄhrend der beiden letzten Jahrzehnte im Vergleich zum offiziell gemessenen Sozialprodukt zugenommen hat.RésuméL’économie informelle a-t-elle augmenté en Allemagne de l’Ouest? — Les auteurs discutent les déterminants les plus importants de l’économie informelle et mesurent leur développement en Allemagne (RFA) pour la période 1960-1978. Ils pondèrent les déterminants différents et évaluent leur influence sur le volume et le développement de l’économie souterraine à l’aide des analyses de sensitivité. Les résultats de ces calculs suggèrent que l’économie informelle en Allemagne a augmenté pendant les dernières deux décades en comparaison avec le PNB officiellement mesuréResumenHa crecido la economía sombra en Alemania ? — Se discuten las determinantes más importantes de la economia sombra y se mide su desarrollo cuantitativamente para la RepÚblica Federal de Alemania en el período 1960-1978. Se sopesan las distintas determinantes y se evalÚa su influencia sobre el tamaño y el desarrollo de la economia sombra mediante la ayuda de análisis de sensitividad. Los resultados de estos càlculos sugieren que la economía sombra en Alemania ha crecido a lo largo de las Últimas décadas comparado con el PNB medido oficialmente.

Low-cost decisions as a challenge to public choice

In the last 25 years we have seen a great deal of success in the scientific research programme called ‘public choice’. One of the main aims of this programme is to develop positive theories of political processes, like theories of voting behaviour, of government behaviour, of bureaucratic behaviour, and of interest group behaviour, just to mention the most important theory sets in this area.1 The methodological core of this research programme consists in the economic model of behaviour, the ‘homo oeconomicus’, or ‘rational evaluating maximising man’ (REMM), as he is sometimes called (see, e.g., Brunner, 1987). It is assumed that individuals (subjectively) evaluate different action possibilities according to the perceived costs and benefits, and that they choose that action which promises the highest expected net benefit. During recent decades this standard methodological approach in economics has — in a kind of ‘imperialism’ — been applied to decisions largely outside the realm of traditional economics. Thus, new sub-disciplines have been created, for example, ‘the economic analysis of law’, ‘the economic analysis of the family’, or ‘the economics of arts’, to name just a few. Public choice is the application of this approach to political (public sector) decisions, and in this area it is a successful competitor of traditional political science, which follows more or less a ‘public interest’ approach, i.e., assuming that political decision makers do not follow their own personal interests but have strong enough incentives to pursue the interests of society or at least of the social group to which they belong.

Politico-economic interactions of German public performing arts institutions

Our paper analyzes the conduct of German public performing arts institutions in terms of “non-market decision making” or public choice. Apart from consumers of performing arts managers of performing arts institutions and public donors are main agents. A manager of a performing arts institution will not assume that the number of visitors is independent of his institutions programme or the ticket prices. By the same reasoning he will regard the amount of public subsidies not as exogenous, but dependent on his own policy. If future grants depend on present and past success (however defined), this will feed back into managerial decisions, along with expectations about demand. Data for the Federal Republic of Germany serve to empirically support the theoretical argument.

Tragic Choices and Collective Decision‐Making: An Empirical Study of Voter Preferences for Alternative Collective Decision‐Making Mechanisms

Central to this paper has been the idea that there might be a demand on the part of the citizens for having specific decision-mechanisms in specific types of situations. This demand cannot be deduced on purely theoretical grounds, but rather should be registered case by case. Theory might help in categorizing classes of situations where decisions can be tackled with the same approach. In any case, the choice of a decision-mechanism should not be left completely at the discretion of the policymaker if the citizens welfare is to be promoted in a suitable way. Copyright 1997 by Royal Economic Society.