Taxpayers underperceive burdens that are indirect, withheld, or fragmented, so revenue systems drift towards opacity.
Puviani's 1903 analysis. Withholding, indirect taxation and inflation all reduce perceived burden without reducing actual burden, and revenue systems drift toward whichever forms are least visible.
In practice
- A tax collected at source is resented far less than the identical amount billed annually.
- A subscription that takes £14 monthly is cancelled less often than one billing £168 once a year.
- Further reading
- Wikipedia
- Subject
- Economics & Incentives
- Essay
- The theories behind every argument about money