The Relevance of the Theory of Fiscal Illusion. The Case of the Italian Tax System

Autori/Curatori: Roberto Dell'Anno, Vincenzo Maria De Rosa
Anno di pubblicazione: 2013 Fascicolo: 2 Lingua: English
Numero pagine: 30 P. 63-92 Dimensione file: 110 KB
DOI: 10.3280/SPE2013-002004
Il DOI è il codice a barre della proprietà intellettuale: per saperne di più clicca qui

Qui sotto puoi vedere in anteprima la prima pagina di questo articolo.

Se questo articolo ti interessa, lo puoi acquistare (e scaricare in formato pdf) seguendo le facili indicazioni per acquistare il download credit.
Acquista Download Credits per scaricare questo Articolo in formato PDF

anteprima articolo

FrancoAngeli è membro della Publishers International Linking Association, Inc (PILA)associazione indipendente e non profit per facilitare (attraverso i servizi tecnologici implementati da l’accesso degli studiosi ai contenuti digitali nelle pubblicazioni professionali e scientifiche

This work analyses the phenomenon of fiscal illusion (Puviani, 1903) in the context of the Italian tax system. Financial (or fiscal) illusion refers to mechanisms which cause a cognitive alteration on the part of the taxpayer regarding the evaluation of the costs and benefits of public policies. Puviani (1903) was the first to classify the different types of financial illusions. He highlighted the main strategies used to hide the real costs of financing public goods and services through taxes (illusions on revenue) or to overestimate their usefulness (illusions on expenditure). The main conclusions of the work are that: (i) from a methodological point of view, there is a connection between Puviani’s theory of fiscal illusion and some of the assumptions of the behavioral approach and (ii) from an operational point of view, it is a useful tool to understand the motives that could have inspired several recent taxes and legislative measures within the Italian tax system. These results support the relevance of Puviani’s theory to the contemporary theory and practice of public finance.

  1. Alm J. (2011). Testing Behavioral Public Economics Theories in the Laboratory, Working Papers, 1102, Tulane University, Department of Economics.
  2. Altman M. (ed.)(2006). Foundations and Extensions of Behavioral Economics: A Handbook, New York, M.E. Sharpe Publishers.
  3. Aragon F.M. (2008). The Flypaper Effect Revisited, STICERD - Economic Organisation and Public Policy Discussion Papers Series n. 4. London School of Economics and Political Science.
  4. Becker E. (1996). The Illusion of Fiscal Illusion: Unsticking the Flypaper Effect, Public Choice, 86(1): 85-102.
  5. Bernheim D.B. and A. Rangel (2008). Behavioural Public Economics. In Durlauf and Blume (eds.)(2008).
  6. Blaufus K., B. Jonathan, J. Hundsdoerfer, D. Kiesewetter and J. Weimann (2010). It’s All About Tax Rates: An Empirical Study of Tax Perception, Arqus-Diskussionsbeiträge zur quantitativen Steuerlehre, No. 106.
  7. Blom-Hansen J. (2005). Renter Illusion: Fact or Fiction?, Urban Studies, 42: 127-40.
  8. Boylan S.J. and P.J. Frischmann (2006). Experimental Evidence on the Role of Tax Complexity in Investment Decisions, Journal of the American Taxation Association, 28 (2): 69-88.
  9. Brennan G. et al. (eds.)(1988). Taxation and Fiscal Federalism: Essays in Honour of Russell Mathews, Sydney, Australian National University Press.
  10. Buchanan J.M. (1960). La scienza delle finanze: The Italian Tradition in Fiscal Theory, in J.M. Buchanan, Fiscal Theory and Political Economy. Selected Essays, Chapel Hill, The University of North Carolina Press.
  11. Buchanan J.M. (1967). The Fiscal Illusion. Public Finance in Democratic Process: Fiscal Institutions and Individual Choice, Chapel Hill (USA), University of North Carolina Press.
  12. Campbell R.J. (2004). Leviathan and Fiscal Illusion in Overlapping Jurisdictions, Public Choice, 120: 301-29.
  13. Carroll R. and J. Yinger (1994). Is the Property Tax a Benefit Tax? The Case of Rental Housing, National Tax Journal, 47: 295-316.
  14. Chetty R. (2010). How Do Complexity, Uncertainty and Other Factors Impact Responses to Tax Incentives?, Testimony for the U.S. Senate Finance Committee. Available at:
  15. Chetty R., A. Looney and K. Kroft (2009). Salience and Taxation: Theory and Evidence, American Economic Review, 99(4): 1145–77.
  16. Chetty R. and E. Saez (2009). Teaching the Tax Code: Earnings Responses to an Experiment with EITC Recipients, NBER Working Papers, 14836, National Bureau of Economic Research, Inc.
  17. Clotfelter C.T. (1976). Public Spending for Higher Education: An Empirical Test of Two Hypotheses, Public Finance, 31: 177-95.
  18. Congdon W.J., J.R. Kling and S. Mullainathan (2009). Behavioral Economics and Tax Policy, National Tax Journal, 62(3): 375-76.
  19. Cosciani C. (1970). Istituzioni di Scienza delle finanze, 6th ed. Turin, UTET.
  20. Cullis J. and P. Jones (1987). Fiscal Illusion and Excessive Budgets: Some Indirect Evidence, Public Finance Quarterly, 15: 219-28.
  21. D’Albergo E. (1959). Premesse scientifiche generali e teoria della illusione finanziaria, Economia Internazionale, 12(1): 33-88.
  22. Da Empoli D. (2002). The Theory of Fiscal Illusion in a Constitutional Perspective, Public Finance Review, 30(2): 377-84.
  23. Dalamagas B.A. (1992). How Rival are the Ricardian Equivalence Proposition and the Fiscal Policy Potency View?, Scottish Journal of Political Economy, 39: 457-76.
  24. Dalamagas B.A. (1993). Fiscal Illusion and the Level of Indebtedness: An International Comparison, South African Journal of Economics 61: 45-58.
  25. De Viti de Marco A. (1936). First Principles of Public Finance, translated from the Italian by Edith Pavlo Marget, New York: Harcourt Brace and Co. Inc.
  26. Dell’Anno R. (2006). Scelte in condizioni di incertezza: il contributo della behavioural economics, Rivista di Politica Economica, 96(3-4): 179-217.
  27. Dell’Anno R. and P. Mourao (2012). Fiscal Illusion around the World. An Analysis using the Structural Equation Approach, Public Finance Review, 40(2): 270-99.
  28. Della Vigna S. (2009). Psychology and Economics: Evidence from the Field, Journal of Economic Literature, 47(2): 315-72.
  29. Dollery B.E. and A.C. Worthington (1995). The Impact of Fiscal Illusion on Housing Values: An Australian Test of the Debt Illusion Hypothesis, Public Budgeting and Finance, 15: 63–73.
  30. Dollery B.E. and A.C. Worthington (1996). The Empirical Analysis of Fiscal Illusion, Journal of Economic Surveys, 10(3): 261-97.
  31. Dollery B.E. and A.C. Worthington (1999a). Fiscal Illusion at the Local Level: An Empirical Test Using Australian Municipal Data, The Economic Record, 75(228): 37-48.
  32. Dollery B.E. and A.C. Worthington (1999b). Tax Complexity and Fiscal Illusion: An Empirical Evaluation of the Heyndels and Smolders Approach, Public Finance/Finances Publiques, 51(4): 522-33.
  33. Dornstein M. (1987). Taxes: Attitudes and Perceptions and Their Social Bases, Journal of Economic Psychology, 8(1): 55-76.
  34. Dougan W.R. and D.A. Kenyon (1988). Pressure Groups and Public Expenditures: The Flypaper Effect Reconsidered, Economic Inquiry, 26: 159-70.
  35. DPEF (2002). Documento di Programmazione Economico-Finaziaria per gli anni 2003-2006, Ministero dell’Economia e delle Finanze, Rome.
  36. DPEF (2006). Documento di Programmazione Economico-Finaziaria per gli anni 2007-2011, Ministero dell’Economia e delle Finanze, Rome.
  37. DPEF (2008). Documento di Programmazione Economico-Finaziaria per gli anni 2009-2013, Ministero dell’Economia e delle Finanze, Rome.
  38. Enrick N.L. (1963). A Pilot Study of Income Tax Consciousness, National Tax Journal, 16: 169-73.
  39. Enrick N.L. (1964). A Further Study of Income Tax Consciousness, National Tax Journal, 17: 319-21.
  40. Epple D. and K. Schipper (1981). Municipal Pension Funding: A Theory and Some Evidence, Public Choice, 37: 141-72.
  41. Fasiani M. (1928-29). Riflessioni su di un punto della teoria dell’illusione finanziaria, in Atti della Reale Accademia delle Scienze di Torino, vol. LXIV: 333-45.
  42. Fasiani M. (1951[1941]). Principii di Scienza delle Finanze, vol. I, Torino, Giappichelli.
  43. Fasiani M. (1980[1932-33]). La Teoria della Finanza Pubblica in Italia [Der Gegenwärtige Stand der Reinen Theorie der Finanzwissenschaft in Italien], in Il Pensiero Economico Italiano 1850-1950, Bologna, Cappelli: 117-202.
  44. Fasiani M. (1998[1929]). Some Notes on an Aspect of the Theory of Fiscal Illusion. In Pasinetti (ed.)(1998): 89-97.
  45. Fausto D. (1982). Expenditure and Tax Illusion, Economia Internazionale, 35(3-4): 435-44.
  46. Finkelstein A. (2009). E-ZTax: Tax Salience and Tax Rates, The Quarterly Journal of Economics, 124(3): 969-1010.
  47. Fochmann M., D. Kiesewetter, K. Blaufus, J. Hundsdoerfer and J. Weimann (2010). Tax Perception - An Empirical Survey, Arqus Discussion Paper, 99.
  48. Forte F. (2004). Fiscal and Monetary Illusion and the Maastricht Rules, XVI Conference SIEP – Società Italiana di Economia Pubblica, Pavia.
  49. Forte F. (2006). La grande illusione, Rivoluzione Liberale, to be downloaded from
  50. Fujii E.T. and C.B. Hawley (1988). On the Accuracy of Tax Perceptions. The Review of Economics and Statistics, 70 (2): 344-47.
  51. Galimberti U. (2006). Dizionario di Psicologia, Torino, UTET.
  52. Gamage D., A. Hayashi and B.K. Nakamura (2010). Experimental Evidence of Tax Framing Effects on the Work/Leisure Decision. UC Berkeley: Berkeley Program in Law and Economics.
  53. Gemmell N., O. Morrissey and A. Pinar (2002). Fiscal Illusion and Political Accountability: Theory and Evidence from two Local Tax Regimes in Britain, Public Choice, 110(3-4): 199-224.
  54. Gensemer B.L., J.A. Lean and W.B. Neenan (1965). Awareness of Marginal Income Tax Rates among High-Income Taxpayers, National Tax Journal, 18(3): 258-67.
  55. Gonzalez C., J. Dana, H. Koshino and M. Just (2005). The Framing Effect and Risky Decisions: Examining Cognitive Functions with fMRI, Journal of Economic Psychology, 26: 1-20.
  56. Greene K.V. and B. Hawley (1991). Personal Income Taxes, Elasticities and Fiscal illusion, Public Choice, 72: 101-09.
  57. Haug P. (2009). Shadow Budgets, Fiscal Illusion and Municipal Spending: The Case of Germany, IWH Discussion Papers, 9-09, Halle Institute for Economic Research.
  58. Heyndels B. and C. Smolders (1994). Fiscal Illusion at the Local Level: Empirical Evidence from the Flemish Municipalities, Public Choice, 80: 325-38.
  59. Heyndels B. and C. Smolders (1995). Tax Complexity and Fiscal Illusion, Public Choice, 85(1-2): 127-41.
  60. Hines J.R. and R.H. Thaler (1995). Anomalies: The Flypaper Effect, The Journal of Economic Perspectives, 9(4): 217-26.
  61. Inman R.P. (2008). The Flypaper Effect. NBER Working Paper, 14579 (December). Cambridge, MA.
  62. Inman R.P. (2009). The New Palgrave Dictionary of Economics. Online Edition. Eds. S.N. Durlauf and L.E. Blume. Palgrave Macmillan.
  63. James S. (2006). Taxation and the Contribution of Behavioral Economics. In Altman (ed.)(2006).
  64. James S. (2010). Combining the Contributions of Behavioral Economics and Other Social Sciences in Understanding Taxation and Tax Reform. Conference of the Society for the Advancement of Behavioral Economics, San Diego State University, August 2-5, 2010, DOI: 10.2139/ssrn.1705207
  65. Kahneman D., J.L. Knetsch and R.H. Thaler (1991). Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias, Journal of Economic Perspectives, 5(1): 193-206.
  66. Kahneman D. and A. Tversky (1979). Prospect Theory: An Analysis of Decisions Under Risk, Econometrica, 47: 263-91.
  67. Kirchler E. (2007). The Economic Psychology of Tax Behaviour, Cambridge, Cambridge University Press.
  68. Kirchler E., S. Muehlbacher, B. Kastlunger and I. Wahl (2007). Why Pay Taxes? A Review of Tax Compliance Decisions, International Studies Program Working Paper, 0730: 1-31.
  69. Knight B. (2000). The Flypaper Effect Unstuck: Evidence on Endogenous Grants From The Federal Highway Aid Program, Finance and Economics Discussion Series 2000-49, Board of Governors of the Federal Reserve System (U.S.).
  70. Kuhberger A. (1998). A Meta-analysis, Organizational Behavior and Human Decision Processes, 75(1): 23-55.
  71. Laibson D. (1997). Golden Eggs and Hyperbolic Discounting, Quarterly Journal of Economics, 112: 443-77.
  72. Martinez-Vazquez J. (1983). Renters’ Illusion or Savvy?, Public Finance Quarterly, 11: 237-47.
  73. McCaffery E.J. and J. Baron (2004). Framing and Taxation: Evaluation of Tax Policies Involving Household Composition, Journal of Economic Psychology, 25(6): 679-705.
  74. McCaffery E.J. and J. Baron (2006). Thinking about Tax Psychology, Public Policy & Law 12(1): 106-35.
  75. McCaffery E.J and J. Slemrod (eds.)(2006). Behavioral Public Finance. New York, Russell Sage Publications.
  76. Mellers B., A. Schwartz and I. Ritov (1999). Emotion-based Choice, Journal of Experimental Psychology: General, 128(3): 332-45.
  77. Mendel G. (1865). Versuche über Pflanzen-Hybriden (Experiments with Plant Hybrids), Proceedings of the National History Society of Brunn (Bohemia, now Czech Republic).
  78. Mill J.S. (1994 [1848]). Principles of Political Economy, Oxford, Oxford University Press.
  79. Mourão P. (2007). The Economics of Illusion. A Discussion Based on Fiscal Illusion, Journal of Public Finance and Public Choice, 25: 67-86.
  80. Mourão P. (2008). Towards a Fiscal Illusion Index, MPRA Paper, 5091, University Library of Munich.
  81. Munley V.G. and K.V. Greene (1978). Fiscal Illusion, the Nature of Public Goods and Equation Specification, Public Choice, 33: 95-100.
  82. Oates W.E. (1969). The Effects of Property Taxes and Local Public Spending on Property Values: An Empirical Study of Tax Capitalisation and the Tiebout Hypothesis, Journal of Political Economy, 77: 957-71.
  83. Oates W. (1988). On the Nature and Measurement of Fiscal Illusion: A Survey. In Brennan et al. (eds.)(1988): 65-82.
  84. Oates W.E. (2005). Property Taxation and Local Public Spending: The Renter Effect, Journal of Urban Economics, 57: 419-31.
  85. Pasinetti L. (ed.)(1998). Italian Economic Papers, Bologna, Il Mulino/Oxford University Press.
  86. Pommerehne W.W. and F. Schneider (1978). Fiscal Illusion, Political Institutions, and Local Public Spending. Kyklos, 31(3): 381-408.
  87. Puviani A. (1973[1903]). Teoria della illusione finanziaria, Palermo, Sandron, reprinted with an introduction by F. Volpi, Milano, ISEDI.
  88. Rupert T.J., L.E. Single and A.M. Wright (2003). The Impact of Floors and Phase-Outs on Taxpayers’ Decisions and Understanding of Marginal Tax Rates, Journal of the American Taxation Association, 25(1): 72-86.
  89. Sanandaji T. and B. Wallace (2011). Fiscal Illusion and Fiscal Obfuscation: Tax Perception in Sweden, Independent Review, 16(2): 237-46.
  90. Sausgruber R. and J. Tyran (2005). Testing the Mill Hypothesis of Fiscal Illusion, Public Choice, 122(1): 39-68.
  91. Schepanski A. and D. Kelsey (1990). Testing for Framing Effects in Taxpayer Compliance Decisions, Journal of the American Taxation Association, 12(2): 60-77.
  92. Schepanski A. and T. Shearer (1995). A Prospect-theory Account of the Income-tax Withholding Phenomenon, Organizational Behavior and Human Decision Processes, 63(2): 174-86.
  93. Schmölders G. (1960). Das Irrationale in der öffentlichen Finanzwirtschaft, Reinbeck, Rowohlt.
  94. Schokkaert E. (1988). Fiscal Preferences and Fiscal Knowledge at The Local Level, Journal of Economic Psychology, 9(1): 29-46.
  95. Slemrod J. (2010). Old George Orwell Got It Backward: Some Thoughts on Behavioral Tax Economics, FinanzArchiv: Public Finance Analysis, 66(1): 15-33.
  96. Thaler R.H. (1980). Toward A Positive Theory of Consumer Choice, Journal of Economic Behavior and Organization, 1: 39-60.
  97. Turnbull G.K. (1992). Fiscal Illusion, Uncertainty, and The Flypaper Effect, Journal of Public Economics, 48: 207-23.
  98. Turnbull G.K. (1998). The Overspending and Flypaper Effects of Fiscal Illusion: Theory and Empirical Evidence, Journal of Urban Economics, 44(1): 1-26.
  99. Tversky A. and D. Kahneman (1992). Advances in Prospect Theory: Cumulative Representation of Uncertainty, Journal of Risk and Uncertainty, 5: 297-323.
  100. Ura J.D. and E.M. Socker (2011). The Behavioral Political Economy of Budget Deficits: How Starve the Beast Policies Feed the Machine, The Forum, 9(2), Article 7. DOI: 10.2202/1540-8884.1430
  101. Van Raan A.F.J. (2004). Sleeping Beauties in Science, Scientometrics, 59(3): 461-66.
  102. Volpi F. (1973). Introduzione. In Puviani (1973[1903]).
  103. Wagner R.E. (1976). Revenue Structure, Fiscal Illusion, and Budgetary Choice, Public Choice, 25: 45-61.
  104. Wagner R.E. (2003). Public Choice and the Diffusion of Classic Italian Public Finance, Il pensiero economico italiano, 11: 271-82.
  105. Williamson M.R. and A.J. Wearing (1996). Lay People’s Cognitive Models of The Economy, Journal of Economic Psychology, 17(1): 2-38.
  106. Wycoff P. (1991). The Elusive Flypaper Effect, Journal of Urban Economics, 30: 310-28.

Roberto Dell'Anno, Vincenzo Maria De Rosa, The Relevance of the Theory of Fiscal Illusion. The Case of the Italian Tax System in "HISTORY OF ECONOMIC THOUGHT AND POLICY" 2/2013, pp 63-92, DOI: 10.3280/SPE2013-002004