Is tax avoidance about greed - or spite?

Once someone is outrageously wealthy, increasing their wealth makes no real difference. So why do they carry on avoiding paying taxes that would help others out of poverty? Some new research suggests that it has more to do with spite than greed …

“Last year Karla Hoff, an economist at the World Bank who is currently working at Princeton University, and her colleagues reported the results of experiments conducted in villages in the Indian state of Uttar Pradesh (American Economic Review, vol 98, p 494). In these tests, two players started out with 50 rupees each. The first could choose to give his to the second, in which case the experimenters added a further 100 rupees, giving the second player 200 rupees in total. The second player could decide to keep the money for himself, or share it equally with the first player. A third player then entered the game, who could punish the second player - for each 2 rupees he was willing to spend, the second player was docked 10 rupees.

The results were startling. Even when the second player shared the money fairly, two-thirds of the time the newcomer decided to punish him anyway - a spiteful act with seemingly no altruistic payoff. "We asked one guy why," says Hoff. "He said he thought it was fun."

Hoff found that high-caste players were more likely to punish their fellow gamers spitefully than low-caste players, leading her to suggest that context is everything. It is not that people in Uttar Pradesh are nastier than elsewhere, but rather that the structure of their society makes them acutely conscious of status. The sensitivity of higher castes to their position makes them tend not to support any changes that threaten to level the social hierarchy, such as development projects. But higher castes can also put others down, safe in the knowledge that "untouchables" are unlikely to strike back.”

Pretty easy to equate caste with wealth-related snobbery ...