Diligentia Foundation Funds Research Project at FernUni Schweiz on Administrative Barriers in the Tax System

The project examines why many people in Germany – particularly individuals from disadvantaged socio-economic backgrounds – do not submit a tax return and consequently forgo potential tax deductions. This behaviour effectively makes the tax system less progressive than intended by policymakers: households with lower incomes often end up paying more tax than they should.

At the heart of the project is the question of which frictions (referred to as hassle costs) prevent people from filing a tax return. Through a field experiment, the researchers systematically analyse which types of time, informational and administrative burdens are perceived as particularly significant obstacles. The aim is to better understand which factors hinder the filing of tax returns – and the claiming of eligible deductions – and to identify how these barriers can be reduced.

The project’s findings aim to help simplify tax processes for citizens and improve access to deductions, particularly for low-income households. The results will be relevant for the design of tax systems and social programmes in many countries facing similar challenges.

The funding provided by the Diligentia Foundation underscores the academic relevance and social importance of this research project. The foundation supports initiatives that make innovative contributions to major societal challenges – such as this project, which seeks to simplify and enhance administrative processes within the tax system.