Tax compliance is a concern to governments around the world. Prior research (Alm, J. and I. Sanchez: 1995, KYKLOS 48, 3–19) has attributed unexplained inter-country differences in compliance rates to differences in social norms. Economics researchers studying tax compliance in the United States (U.S.) (see for example J. Andreoni et al.: 1998, Journal of Economic Literature 36, 818–860) have called for more attention to social (as opposed to economic) influences on tax compliance. In this study, we (...) extend this prior research by explicitly examining the role of social norms [Cialdini, R. and M. Trost: 1998, The Handbook of Social Psychology (Oxford University Press, New York)] on tax compliance in three different countries. We test our research hypotheses using a hypothetical compliance scenario, which was administered in Australia, Singapore, and the U.S. There were differences in compliance rates and social norms among the three countries. Factor analysis of the social norm questions identified three distinct social norm constructs. Two of these factors were significant in explaining tax compliance behavior. The first and most influential factor was taxpayers’ own personal moral beliefs, along with the beliefs of those close to them (e.g., friends and important others). The second significant factor represented societal views of proper behavior. We conclude that social norms help to explain tax compliance intentions and why tax compliance rates are higher than would be predicted by strictly economic models. (shrink)

In this article we argue that puzzle of tax compliance can be explained, at least in part, by recognizing the typically neglected role of ethics in individual behavior; that is, individuals do not always behave as the selfish, rational, self-interested individuals portrayed in the standard neoclassical paradigm, but rather are often motivated by many other factors that have as their main foundation some aspects of “ethics.” We argue that it is not possible to understand fully an individual’s compliance (...) decisions without considering in some form these ethical dimensions. Specifically, we argue here that there is much direct and indirect evidence that ethics differ across individuals and that these differences matter in significant ways for their compliance decisions. We then put this in the larger context of the inability of the standard neoclassical paradigm to explain compliance of at least some individuals, and we suggest several possible avenues by which theory can be expanded to incorporate ethics. We conclude by arguing that a full house of compliance strategies is needed to combat tax evasion, strategies that include the traditional “enforcement” paradigm suggested by and consistent with neoclassical theory, a less traditional “service” paradigm that recognizes the important role of a “kinder and gentler” tax administration in encouraging compliance, and, importantly, a new “trust” paradigm that is built on the foundation of ethics, in which the tax administration must recognize that it can erode the ethics of taxpayers by its own decisions. (shrink)

The purpose of this study is to explore with more rigor and detail the role of social norms in tax compliance. This study draws on Cialdini and Trost’s (The Handbook of Social Psychology: Oxford University Press, Boston, MA, 1998) taxonomy of social norms to investigate with more specificity this potentially decisive (Alm and McKee, Managerial and Decision Economics, 19:259–275, 1998) influence on tax compliance. We test our research hypotheses regarding the direct and indirect influences of social norms using (...) a hypothetical compliance scenario with 174 experienced taxpayers as participants. Factor analysis of the social norm questions successfully identified four distinct social norm constructs, in line with Cialdini and Trost (1998). Results of the path analysis show that individuals’ standards for behavior/ethical beliefs (personal norms) as well as the expectations of close others (subjective norms) directly influence tax compliance decisions, whereas general societal expectations (injunctive norms) and other individuals’ actual behavior (descriptive norms) have an indirect influence. This shows that social norms have important direct as well as indirect influences on tax compliance behavior. We also investigate a number of attitudinal variables that may be related to social norms and taxpayer compliance. The results of this study further clarify the important role that social norms have with regard to taxpayers’ compliance behavior. (shrink)

This study examines how taxpayer support for government spending can improve tax compliance. While there is ample evidence on the deterrent effect of audit probability on taxpayer noncompliance, there is no evidence related to the moderating role that taxpayer support may have on compliance behavior. We also examine the moderating role that taxpayer ethics plays in compliance decisions. Results of our study indicate that the level of taxpayer support influences taxpayer compliance decisions, in that those with (...) greater support for how tax dollars are spent report higher amounts of taxable income. In addition, we find that audit probability influences taxpayer compliance decisions when there is support for the government’s use of tax dollars for non-welfare programs, such as defense. However, for welfare programs, such as healthcare, taxpayer support leads to increased compliance regardless of audit rate. When taxpayers do not support government programs, their compliance is lower regardless of the audit probability. This highlights the importance of gaining taxpayer support for government programs and indicates that attempts to align the interests of taxpayers with those of the government may increase voluntary compliance among taxpayers. Finally, we find that taxpayer ethics influences compliance such that, for individuals who have lower ethical standards, a high audit rate as well as support for a program may be necessary to improve compliance behavior. Theoretical and practical implications of these findings are discussed. (shrink)

Tax compliance has been extensively researched. Yet, the classic question ‘why do people pay taxes?’ remains unanswered. In Jordan, tax evasion is widespread. The state and citizens have been trapped in a continuous hide-and-seek game, which has taken the form of a virtuous cycle. This paper investigates tax evasion along with the most noticeable features of the Jordanian tax system. It also highlights how the virtuous cycle of tax evasion has been established and what could possibly be a way (...) out of it. We argue that sociocultural values are the most prominent cause for tax evasion. That is, the procedures of state formation and functionality in Jordan have created mutual distrust between the state and its citizens. Having been raised in a community characterized by deep distrust, tax evasion is no longer considered immoral by substantial numbers of the Jordanian population. We argue that successive governments need to create a high-trust-based culture and formulate strategies that serve to acquire normative ethical values in order to enhance voluntary compliance. The way to accomplish this necessity is through enforcing the state’s transparency and accountability. The taxation system needs to concentrate on income tax rather than raise tax rates on essential commodities to collect substantial tax revenues. Thus, further reform of the taxation system along with a reduction in tax incentives need to be considered. Moreover, lowering the exceptionally high personal income tax threshold would bring Jordan in line with its peers, expand the base, and introduce more progressivity. There would also be a scope to introduce a minimum tax based on sales as a tool to address tax evasion. (shrink)

Tax compliance is an important issue for governments and the public alike. To meet public needs and fund public mandates, firms around the world are expected to comply with tax laws. Factors that are related to organizational (firm) tax compliance have not been sufficiently examined in the literature. Owing to the increasing global influence of transition economies, factors associated with firm tax compliance in transition economies are particularly of interest. Based on a sample of over 5,000 firms (...) from 22 former Soviet Bloc transition economies, we find that higher levels of corruption and higher levels of particularized trust (reliance on friends and family) are associated with lower levels of tax compliance. Interestingly, we also find that the negative relationship between corruption and tax compliance is weakened in situations of higher generalized trust (trust in strangers). Overall, our study’s results suggest that institutional factors play an important role and are related to firm tax compliance behavior in transition economies. (shrink)

While the importance of fostering individual taxpayers’ (hereafter taxpayers) trust in government to encourage tax compliance is widely acknowledged, how policy actions can increase trust in government remains unclear. Thus, the main purpose of our research is to see whether policy actions that signal government benevolence during a crisis can quickly increase trust in government, and its positive implications for tax compliance intentions. Another goal of our research is to see whether such a quick change of trust is (...) driven by emotions. To test this, we use the British COVID-19 Self-Employment Income Support Scheme (hereafter SEISS) as a natural experiment. Right after the SEISS was launched to the British public, we recruited a sample of 500 British self-employed taxpayers via Prolific. Our results suggest that receiving (vs. not receiving) government support increases trust in government and enhances tax compliance intentions. In addition, trust in government mediates the positive impact of receiving (vs. not receiving) government support on tax compliance intentions. More important, our results suggest that policy actions that signal government benevolence during a crisis can increase trust in government quickly because it is driven by taxpayers’ emotions such as gratitude. These results have important implications for governments to efficiently deal with the sharp rise in public debts caused by the COVID-19 pandemic. (shrink)

Friendly persuasion, in contrast to deterrent measures like tax audits and penalties on underreported taxes, is a positive and possibly a cost effective method of increasing taxpayer compliance. However, prior studies have failed to show that friendly persuasion has a significant impact on compliance (Blumenthal et al., 2001; McGraw and Scholz, 1991). In our study, in contrast to prior studies, we examine the impact of generating and reading reasons supporting compliance as friendly persuasion on individuals' income reporting (...) behavior as well as control for gender effects. Specifically, we predict an interaction effect between friendly persuasion and gender on compliance behavior. We carried out a 2 (friendly persuasion and control) × 2 (men and women) full factorial experiment, where participants earned $30 by completing two questionnaires. Participants in the friendly persuasion group were required first to generate and second to read a list of reasons why they should comply fully. Afterwards, participants in both groups were asked to report the income they earned and pay tax on the reported income. The results show a significant main effect for gender as well as a significant interaction effect between gender and friendly persuasion on income reported. Women in the friendly persuasion group reported significantly higher income compared to men in that group. Other comparisons were not significant. Policy implications for increasing taxpayers' ethics and compliance are highlighted. (shrink)

Individuals are increasingly switching from hiring tax professionals to prepare their tax returns to self-filing with tax software, yet there is little research about how interacting with tax software influences compliance decisions. Using an experiment, we examine the effect of preparation method, tax software versus tax professional, on willingness to lie. Results from a structural equation model based on data collected from 211 actual taxpayers confirm the hypotheses and show individuals are more willing to lie to tax software than (...) a human tax professional. Our results also suggest this effect is jointly mediated by perceptions of social presence and the perceived detectability of the lie. Beyond the practical implications for tax enforcement, our findings broadly contribute to accounting and other literatures by examining the theoretical mechanisms that explain why individuals interact differently with computers versus humans. We also extend prior research on interactions between humans and computers by examining economically motivated lies. (shrink)

This article synthesizes insights from deterrence theory and social psychology literature on retributive justice to develop and test a theoretical model which predicts how and why observers’ tax compliance intentions are influenced by knowledge of the punitive outcomes faced by individuals found guilty of tax fraud. We test our model experimentally on a sample of Canadian taxpayers and manipulate perceived responsibility for a fraud and whether a fraud perpetrator is punished. We show that observers’ tax compliance increases when (...) a fraud perpetrator is punished only when the perpetrator is perceived as blameworthy. The psychological process through which this positive influence operates is relatively complex, as it includes perceptions of punishment deservingness and affect. We also find that tax compliance decreases when a tax fraud perpetrator is unpunished, regardless of perceived blameworthiness. Our results are robust when we control for economic determinants known to influence fraud. The article concludes by discussing our findings’ implications for fraud research and policy. (shrink)

Although naming-and-shaming (shaming) is a commonly used tax enforcement mechanism, little is known about the efficacy of shaming tax evaders. Through two experiments, this study examines the effects of shaming tax evaders on third-party observers’ perceptions of retributive justice and tax compliance intentions, and whether the salience of persuasion of observers moderates these relationships. Based on insights from defiance theory, the message learning model, and persuasive communications, this study predicts and finds that shaming evaders increases observers’ tax compliance (...) intentions. Furthermore, the results show that higher persuasion, which includes sanction and normative appeals, affects observers’ tax compliance intentions. This study also suggests that shaming has a positive effect on perceptions of retributive justice. Importantly, the results reveal that perceptions of retributive justice in shaming punishment mediate the effect of shaming on tax compliance intentions. The implications for theory and practice are discussed. (shrink)

The Statements on Responsibilities in Tax Practice (SRTPs) provide guidance to the CPA when making decisions in tax practice. Many of these decisions are ethical in nature and have implications for tax compliance. In this study, a survey methodology is used to test whether the SRTPs affect decisions that CPAs make. The findings suggest that a clear majority of CPAs follow the SRTPs when making ethical decisions relating to tax return preparation and that CPAs follow the SRTPs more often (...) than unlicensed preparers on half the issues tested. However, a statistically significant number of CPAs do not follow the SRTPs and, CPAs do not follow the SRTPs any more often than unlicensed tax preparers on three issues. (shrink)

Businesses that rely heavily on cash transactions have been found to be particularly susceptible to low tax ethics. Recent research indicates that cash is a highly powerful and tempting reward, which elicits a strong emotional response. In this article, we investigate how emotions affect tax ethics in a series of experimental studies. Specifically, we show that affective priming and the ease with which tax information is retrieved moderate tax ethics. We also show that the relative effectiveness of deterrence, such as (...) audit probabilities and tax fines, is moderated by affect. These results point toward a complex picture of tax ethics, requiring a multifaceted policy approach that emphasizes not only enforcement, but also cognitive and affective aspects of human behavior. (shrink)

This manuscript proposes that tax avoidance can be better understood and mitigated as a sustainability problem. Tax avoidance is not just a financial problem for tax authorities, but one that erodes critical common spaces necessary for the smooth functioning of regulatory compliance, organizational integrity, and society. Defining tax avoidance as a sustainability problem offers a broader and more holistic understanding of the organizational and societal consequences of tax avoidance behavior. Sustainability is also a mature and legitimized concept that can (...) readily incorporate taxation. A variety of established sustainability metrics have the capacity to incorporate anti-tax avoidance measures or publicize firms that engage in fair tax practices. This manuscript concludes that integrating sustainability principles, in conjunction with important extant work on corporate social responsibility and taxation, can advance the goals of decreasing the occurrence and acceptability of tax avoidance. (shrink)

The relationship between tax authorities and taxpayers is essential for tax compliance. The aim of the present paper was to explore systematically the determinants of this relationship and related tax compliance behaviors based on the extended slippery slope framework. We used in-depth qualitative interviews with 33 self-employed taxpayers and 30 tax auditors. Interviewees described the tax relationship along the extended slippery slope framework concepts of power and trust. However, also novel sub-categories of power (e.g., setting deadlines) and trust (...) (e.g., personal assistance) were mentioned. Furthermore, also little-studied categories of tax behavior emerged, such as accepting tax behavior e.g., being available to the tax authorities, or stalling tax behavior e.g., the intentional creation of complexity. The results comprehensively summarize the determinants of the tax relationship and tax compliance behaviors. Additionally, results highlight future research possibilities and illustrate policy interventions. (shrink)

Prior research shows taxpayers’ perceptions of fairness leads to greater cooperation and compliance with tax authorities. Yet our understanding of tax fairness has been hampered by its general reliance upon models and measures of fairness developed by organizational fairness research, even though fairness is a perception subject to contextual influences. Accordingly, we attempt to gain insight into the influence of contextual factors on fairness through the development of a theoretically based and empirically derived model of tax fairness, grounded in (...) organizational literature, but empirically tested in the tax context. Our analysis shows the extent to which items and dimensions found in the organizational fairness literature reflect taxpayers’ perceptions of tax fairness. Most importantly, our findings contribute to fairness research by identifying the role of relevant comparison groups in affecting perceptions of fairness, and thereby extends our understanding of the role of context in affecting fairness perceptions. Furthermore, by identifying the dimensions and items incorporated in perceptions of tax fairness, our study provides a foundation for tax researchers and policy makers to determine how best to promote voluntary taxpayers’ compliance and in so doing, mitigate tax avoidance and tax evasion. (shrink)

We present an algorithm that can anticipate tax evasion by modeling the co-evolution of tax schemes with auditing policies. Malicious tax non-compliance, or evasion, accounts for billions of lost revenue each year. Unfortunately when tax administrators change the tax laws or auditing procedures to eliminate known fraudulent schemes another potentially more profitable scheme takes it place. Modeling both the tax schemes and auditing policies within a single framework can therefore provide major advantages. In particular we can explore the likely (...) forms of tax schemes in response to changes in audit policies. This can serve as an early warning system to help focus enforcement efforts. In addition, the audit policies can be fine tuned to help improve tax scheme detection. We demonstrate our approach using the iBOB tax scheme and show it can capture the co-evolution between tax evasion and audit policy. Our experiments shows the expected oscillatory behavior of a biological co-evolving system. (shrink)

We conduct an empirical study on the determinants of the psychological costs of tax evasion, also known as tax morale. As a preliminary step, we build a model of tax evasion including non-monetary considerations, show the relationship between tax compliance and tax morale. In the empirical analysis of tax morale we find, using a binomial logit model, that the justification of tax evasion can be explained by the presence of grievance in absolute terms (those who feel that taxes are (...) too high, those who feel that public funds are wasted, and those who accept underground economic activities); and grievances in relative terms (the suspected level of others’ tax evasion). The sense of duty and the level of solidarity are also relevant factors, but to a lesser extent. (shrink)

Increasing the tax compliance of self-employed business owners—particularly of trade-specific service providers such as those involved in construction and repair work—remains an ongoing challenge for tax authorities. From a compliance point of view, cash transactions are particularly problematic when services are paid for on the spot, as these exchanges are difficult to audit. We present experimental evidence testing ten different policy strategies rooted in the enforcement, service, and trust/social paradigms, in a setting that allows payment either via a (...) transaction that directly reports income for tax collection purposes or in cash, where taxes are only collected on reported income. Our sample includes both a typical subject pool of students, as used in most previous studies, and non-students who are active within service industries characterised by the opportunity to engage in cash transactions. While our comparative results show that, for both student and non-student participants, interventions that rely on greater enforcement by the tax authority have the greatest effect on compliance in our cash economy setting, treatments involving cooperative elements may be similarly effective in enhancing tax compliance. Given their effectiveness, cooperative approaches should therefore be considered for addition to the policy mix if implemented at relatively low costs, making both carrot and stick approaches promising to increase compliance in an environment where cash-for-service payments offer a common benefit for small businesses and their customers from implicit collusion that enables tax evasion. (shrink)

From 2010 to 2020, Indonesia’s tax-to-gross domestic product (GDP) ratio has been declining. A tax-to-GDP ratio trend of this magnitude indicates that the tax authority lacks the capacity to collect taxes. The tax administration system’s modernization utilizing information technology is thus deemed necessary. Artificial intelligence (AI) technology may serve as a solution to this issue. Using the theoretical frameworks of innovations in tax compliance, the cost of taxation, success factors for information technology governance (SFITG), and AI readiness, this study (...) aims to analyze the costs and benefits, the enablers and inhibitors, and the readiness of the government and related parties to apply AI to modernize the tax administration system in Indonesia. This study used qualitative approaches for the data’s collection and analysis. The data were obtained through a literature study and in-depth interviews. The findings show that AI application in the field of taxation can assist tax authorities in enforcing the law, provide taxpayers with convenience in fulfilling their tax obligations, improve justice for all taxpayers, and reduce tax compliance costs. The openness of Indonesia to technological developments, as evidenced by the AI National Strategy, is a supporting factor in the application of AI in Indonesia, particularly for the modernization of the tax administration system. The absence of specific regulations governing AI adoption, as well as a lack of human resources that can help the tax administration process, data, and infrastructure already support, are the impediments to implementing AI for the modernization of the tax administration system in Indonesia. (shrink)

Although the role of fairness in tax compliance has been of increasing interest among the academic and professional tax communities, very little is known about the role of interactional fairness. Interactional fairness refers to the quality of the treatment provided to individuals from authority figures, such as tax authority representatives. We conduct an experiment using US taxpayers to examine the role of interactional fairness on tax compliance intentions, and how detection influences this relation. Taxpayers’ detection salience reflects their (...) perceptions that they will be audited by the tax authority. Using insights from conditional cooperation theory, we predict and find that detection moderates the relation between interactional fairness and tax compliance intentions, such that the effect of interactional fairness on tax compliance intentions diminishes with higher detection. We discuss the implications of our results for tax policy. (shrink)

Although the role of fairness in tax compliance has been of increasing interest among the academic and professional tax communities, very little is known about the role of interactional fairness. Interactional fairness refers to the quality of the treatment provided to individuals from authority figures, such as tax authority representatives. We conduct an experiment using US taxpayers to examine the role of interactional fairness on tax compliance intentions, and how detection influences this relation. Taxpayers’ detection salience reflects their (...) perceptions that they will be audited by the tax authority. Using insights from conditional cooperation theory, we predict and find that detection moderates the relation between interactional fairness and tax compliance intentions, such that the effect of interactional fairness on tax compliance intentions diminishes with higher detection. We discuss the implications of our results for tax policy. (shrink)

As a contribution to the continuing debate about tax practitioner ethics, this paper explores the main streams of Western ethical thought that are relevant to tax practitioners’ work, most typically deontology and consequentialism. It then goes on to consider the impact of such ethical influences on the professional ethical codes of conduct that govern tax practitioners’ work, and attempts to unravel the complex work and ethical environment of the practice of tax in terms of tax compliance and tax avoidance. (...) The paper then examines the prior studies on tax practitioners and ethics and the type of dilemmas that practitioners face in the context of their work. The paper proceeds to examine empirically the extent to which tax practitioners take a consequentialist versus a deontological approach in their reasoning about moral dilemmas. This is carried out by an innovative use of the Defining Issues Test. (shrink)

Tax avoidance practices by Multinational Enterprises such as Google, Microsoft, Apple, Starbucks and others are increasingly under scrutiny both from a legal and an ethical perspective. In 2013, the OECD launched an ‘Action Plan’ to encourage the G20 countries to address Base Erosion and Profit Shifting through an internationally co-ordinated approach, arguing that tax avoidance represents a risk for tax revenues and tax fairness, potentially “undermining taxpayers voluntary compliance.” The analysis of tax avoidance in the existing business ethics literature (...) suffers from a black-and-white approach, contending either that tax avoidance is unethical or that, being legal, tax avoidance is also ethical. However, we believe that within tax avoidance practices there are important distinctions to be made. In this paper, we analyze the ethics of tax avoidance by identifying three different forms of avoidance practices: state-induced, strategic, and toxic avoidance. We develop a more nuanced approach reviewing both the ethical arguments in defense and the ethical issues associated with each form of tax avoidance. Finally, we propose an ethical framework that could assist executives and policy-makers in their decision-making concerning tax avoidance. (shrink)

The paper presents, in the synthetic way, the issue of the rationality of the tax system and taxation principles in relation to the clearly visible fiscal crisis in the 21st century caused by, among others, COVID-19 pandemic. The analysis which is theoretical (descriptive, comparative) was carried out by using tools indicated in the area of New Institutional Economics (NIE). Attention was devoted primarily to the importance of specific institutional arrangements, broadly understood as the “rules of the game” applicable in the (...) political and economic spheres, and related to the problems of public finances. Research has shown that the appropriate design of tax rules may contribute, to some extent, to limiting the fiscal crisis. Tax policy, and even more broadly, fiscal policy, may determine the formula in which the economic achievements regarding compliance with tax principles and fiscal rules can be implemented. What is primarily important is the legal framework (one of the most important formal institutions) within which state policy in the field of public finances should be implemented. (shrink)

This study used a laboratory experiment with monetary incentives to test the impact of three personal factors (moral reasoning, value orientation and risk preference), and three situational factors (the presence/absence of audits, tax inequity, and peer reporting behavior), while controlling for the impact of other demographic characteristics, on tax compliance. Analysis of Covariance (ANCOVA) reveals that all the main effects analyzed are statistically significant and robustly influence tax compliance behavior. These results highlight the importance of obtaining a proper (...) understanding of these factors for developing effective policies for increasing the level of compliance, and indicate that standard enforcement polices based on punishment alone should be supplemented by an information system that would acquaint tax payers with the compliance level of other tax payers; reinforce the concept of fairness of the tax system among tax payers; and develop programs that enhance and appeal to a taxpayer's moral conscience and reinforce social cohesion. (shrink)

Joseph Heath lumps in quotas and protectionist measures with cartelization, taking advantage of information asymmetries, seeking a monopoly position, and so on, as all instances of behavior that can lead to market failures in his market failures approach to business ethics. The problem is that this kind of rent and rent seeking, when they fail to deliver desirable outcomes, are better described as government failure. I suggest that this means we will have to expand Heath’s framework to a market and (...) government failures approach. I then try to defuse objections that as a government failure, rent seeking may not appear relevant to what managers ought to do. Solving this conceptual issue will also give us an excuse to revisit a separate conceptual issue: the normatively thick conception of “rent” and rent seeking behavior that some use. This normatively thick conception is problematic, I argue, and I offer the beginnings of a novel, normatively neutral conception that is useful for our purposes in making the ethics of rent and rent seeking behavior more than a merely trivial exercise. (shrink)

This study is the first to examine the relationships among Machiavellianism, social norms and taxpayer intentions to fraudulently overstate their deductions. We theorize and empirically document that high Machiavellian taxpayers report significantly less ethical social norms, suggesting that reported social norms are influenced by cognitive biases such as social projection and Machiavellian cynicism; reported social norms are, in general, significantly associated with tax evasion intentions; social norms partially mediate the relationship between Machiavellianism and evasion intentions. Our findings imply that experimental (...) research that controls for key personality traits such as Machiavellianism will be necessary to test the effectiveness of potential interventions designed to enhance social norms and tax compliance. Our findings also raise questions regarding the validity of certain social norm measures used in recent studies, particularly in the case of high Machiavellians. In contrast to much prior research, gender was not associated with the likelihood of committing tax fraud in our multivariate models, suggesting that the higher levels of tax compliance often associated with females may be eroding. (shrink)

In this study, we reconcile conflicting findings from the extant literature on the impact of tax system parameters on tax noncompliance. We argue that social norms play a role of heuristics facilitating tax payers’ response to the instrumental incentives posed by the systemic parameters, such as tax rate and penalties for evasion, and thus moderate the effect of those parameters on willingness to evade taxes. Relying on a unique survey experiment conducted in fourteen countries of Central-Eastern Europe, we demonstrate two (...) types of a conditioning effect of norms. First, the impact of tax rates on respondents’ propensity for tax evasion is moderated by the perceived norms of the society at large. In particular, an increasing tax rate lowers the probability of evasion as long as one views “most others” as honest taxpayers, which highlights the importance of equitability concerns for tax compliance decisions. In contrast, the impact of punishment is moderated by the perceived norms of one’s immediate reference group. Strong subjective compliance norms tend to effectively replace penalties as a mechanism discouraging tax evasion, suggesting that the deterrent effect of a penalty can be entirely suppressed when subjective norms are strong. These findings have important implications for the understanding of tax compliance decisions under different formal and informal regimes. (shrink)

Any system of taxation depends on a substantial degree of compliance from the taxpayer. But do ethical considerations stop at obeying the letter of the tax law, or do they drive one to take a more critical and socially responsible attitude towards tax avoidance as well as evasion? Dr Alan Stainer is Head of Engineering Management at Middlesex University, Bounds Green Road, London N11 2NQ, and Founder Director of the International Society for Productivity & Quality Research; Lorice Stainer is (...) Senior Lecturer in Business Ethics at the University of Hertfordshire Business School and a Business Ethics Consultant; and Alexandra Segal is a Chartered Accountant, Taxation Manager with Keelings Chartered Accountants, London, and a Taxation Consultant. (shrink)

Any system of taxation depends on a substantial degree of compliance from the taxpayer. But do ethical considerations stop at obeying the letter of the tax law, or do they drive one to take a more critical and socially responsible attitude towards tax avoidance as well as evasion? Dr Alan Stainer is Head of Engineering Management at Middlesex University, Bounds Green Road, London N11 2NQ, and Founder Director of the International Society for Productivity & Quality Research; Lorice Stainer is (...) Senior Lecturer in Business Ethics at the University of Hertfordshire Business School and a Business Ethics Consultant; and Alexandra Segal is a Chartered Accountant, Taxation Manager with Keelings Chartered Accountants, London, and a Taxation Consultant. (shrink)

Developing countries often rely on consumption taxes, because these are broad, easy to administer, and harder to evade. However, the taxation system becomes inherently regressive. To counter this problem of the regressive nature of consumption taxes, there is a temptation among policymakers to address equity concerns through a multiplicity of rates, making the consumption tax system complex. Here, complexity is considered the by-product, or companion, to pursuing goals of equity. Complex tax systems, however, pose a different problem relating to equity. (...) Assuming a minimum fixed cost of compliance imposed by a complex tax system, smaller firms and individuals face a much higher cost of compliance relative to larger firms and richer individuals. Oligarchic sectors dominated by a few large firms also find it easier to organize and lobby to get favorable rates compared to competitive sectors with small firms. Though complexity is considered a by-product of several equity-enhancing measures, the Indian experience with its Goods and Services Tax reform serves demonstrates the opposite, that there is a trade-off between equity and complexity. (shrink)

In the global justice literature, growing attention has been given to problems particular to a globalised economy such as tax competition. Political philosophers have started to reflect on how these problems intersect with theories of global justice. This paper explores the idea according to which action-guiding principles of justice can only be formulated at such intersections. This is the starting point from which I develop a ‘non-ideal theory’ of global justice. The methodology of this theory posits that principles of justice (...) are formulated according to the practice they are intended to regulate. Individual practices provide insights about the formulation of principles, for the non-ideal circumstances that prevent the realisation of justice are only revealed through the interpretation of each practice. With regard to the content of principles, I reject the notion that non-ideal theory is applied ideal theory. I offer instead an overview of the main features of a conception of justice for a non-ideal world based on the ideas of compliance, fact-sensitivity, feasibility and path-dependence. The contribution of this paper is twofold: to provide the conceptual framework for an action-guiding non-ideal theory of global justice and to show why this theory is well-suited to address problems of a globalised economy, such as tax competition. (shrink)

Since taking office, the President of the United States has consistently refused to make his tax returns available for public scrutiny. In so doing, he has broken with presidential tradition and kept people guessing about what his tax returns would show if they were disclosed. Interestingly enough, in the absence of concrete knowledge about the President’s tax circumstances, some taxpayers perceive that he did not pay his fair share and others perceive that he did. This situation presents an opportunity for (...) us to consider how vertical equity perceptions about the President’s fair share of taxes, and identification with the President via voting behavior, are jointly associated with taxpayers’ compliance. Using insights from equity theory as reported in Adams Advances in experimental social psychology, Academic Press, New York, 1965) and social learning theory as reported in Bandura, we anticipate and find that those taxpayers who perceive that the President did not pay his fair share of taxes and who most closely socially identify with him have the lowest tax compliance. We use a survey of 600 American taxpayers to capture their perceptions of vertical equity, voting behavior, and tax compliance intentions. Our results may reflect that taxpayers who identify with the President will tend to model his tax-related actions, or may also indicate that some taxpayers vote for a president whose actions are similar to their own. Insights and implications for ethics and tax researchers and tax policy makers are discussed. (shrink)

Regulation of gatekeepers of taxation has been so controversial and important that a review of ethical standards, professional responsibility and industry guidelines is examined. This paper explores whether gatekeepers of taxation need more ethics and enforcement to increase the compliance rate. In this paper we argue that an effective mixture of professional ethics and enforcement of gatekeepers can increase tax compliance. However, we question how much is optimal or reasonable? We theorize that ethics and enforcement should be proportionate (...) to the ecosystem because too much of it can lead to unintended consequences such as increase costs and higher noncompliance. A friendlier tax authority with less complex laws can enhance the compliance process. This strategy, in amalgamation with professional ethics, enforcement policies, and effective reporting systems, could increase the compliance rate. (shrink)

Tax administrators are empowered by the state to secure compliance with tax obligations. Enforcing compliance on the ground is complex, and street-level administrators often engage in the “art of the possible,” leading to dilemmas in the field. This paper examines tax administrators’ practices with regard to Jamaican property tax defaulters with outstanding tax liabilities in excess of 3 years. Drawing on interviews with tax administrators and other key agents, we find that tax administrators reposition themselves from objective enforcers (...) to empathizing officials engaging in schemes of action, doing what they can do rather than what they should do. This is a practical-sense approach to securing compliance. We identify two forms of empathy, assimilated and cynical, and conclude that administrators’ empathetic identification with defaulters does not necessarily arise solely from concern for social cohesion, or inter-subjective compassion, but also sometimes from self-interest. (shrink)

In the global justice literature, growing attention has been given to problems particular to a globalised economy such as tax competition. Political philosophers have started to reflect on how these problems intersect with theories of global justice. This paper explores the idea according to which action-guiding principles of justice can only be formulated at such intersections. This is the starting point from which I develop a ‘non-ideal theory’ of global justice. The methodology of this theory posits that principles of justice (...) are formulated according to the practice they are intended to regulate. Individual practices provide insights about the formulation of principles, for the non-ideal circumstances that prevent the realisation of justice are only revealed through the interpretation of each practice. With regard to the content of principles, I reject the notion that non-ideal theory is applied ideal theory. I offer instead an overview of the main features of a conception of justice for a non-ideal world based on the ideas of compliance, fact-sensitivity, feasibility and path-dependence. The contribution of this paper is twofold: to provide the conceptual framework for an action-guiding non-ideal theory of global justice and to show why this theory is well-suited to address problems of a globalised economy, such as tax competition. (shrink)

The Altdeutsche Textbibliothek [Old German Text Library] is the series of editions of German medieval texts with the richest history. Foundedin 1881 by Hermann Paul, it has been edited by leading Germanists- Georg Beasecke, Hugo Kuhn, Burghart Wachinger. Since 2001, responsibility for the series has rested with Christian Kiening. In the meantime, the series comprises some 120 volumes, with an exemplary combination of closeness to the original manuscript(s) with ease of reading, philological accuracy with concern for university teaching. It includes (...) recognised editions of "classical" authors from around 1200- some with commentary- but also presents veritable editions of authors' works (Notker the German) and high-quality new editions (Eckenlied, Heinrich von dem Türlin). (shrink)

Die ATB ist die traditionsreichste Editionsreihe der germanistischen Mediävistik. Begründet 1881 von Hermann Paul, wurde sie von führenden Fachvertretern, Georg Baesecke, Hugo Kuhn, Burghart Wachinger, betreut. Seit 2001 liegt die Verantwortung in den Händen von Christian Kiening. Die mittlerweile etwa 120 Bände verknüpfen exemplarisch Handschriftennähe und Lesbarkeit, wissenschaftliche Arbeit am Text und Blick auf die akademische Lehre. Sie umfassen anerkannte, zum Teil kommentierte Ausgaben 'klassischer' Autoren der Zeit um 1200, aber auch veritable Werkausgaben (Notker der Deutsche) und anspruchsvolle Neueditionen (Eckenlied, (...) Heinrich von dem Türlin). (shrink)

Recent experimental research has revealed forms of human behavior involving interaction among unrelated individuals that have proven difficult to explain in terms of kin or reciprocal altruism. One such trait, strong reciprocity, is a predisposition to cooperate with others and to punish those who violate the norms of cooperation, at personal cost, even when it is implausible to expect that these costs will be repaid. We present evidence supporting strong reciprocity as a schema for predicting and understanding altruism in humans. (...) We show that under conditions plausibly characteristic of the early stages of human evolution, a small number of strong reciprocators could invade a population of self-regarding types, and strong reciprocity is an evolutionarily stable strategy. Although most of the evidence we report is based on behavioral experiments, the same behaviors are regularly described in everyday life, for example in wage setting by firms, tax compliance, and cooperation in the protection of local environmental public goods. (shrink)