Tax evasion is a complex phenomenon which is influenced not just by economic motives but by psychological factors as well. Economic-psychological research focuses on individual and social ...representations of taxation as well as decision-making. In this 2007 book, Erich Kirchler assembles research on tax compliance, with a focus on tax evasion, and integrates the findings into a model based on the interaction climate between tax authorities and taxpayers. The interaction climate is defined by citizens' trust in authorities and the power of authorities to control taxpayers effectively; depending on trust and power, either voluntary compliance, enforced compliance or no compliance are likely outcomes. Featuring chapters on the social representations of taxation, decision-making and self-employed income tax behaviour, this book will appeal to researchers in economic psychology, behavioural economics and public administration.
Individual differences in mental accounting have rarely been studied, and empirical evidence regarding the relation between mental accounting and personality characteristics is scarce. The present ...paper reports three studies applying a Likert-type scale to assess the extent individuals engage in mental accounting practices. In each study, the five items of the measure loaded on a single dimension and had acceptable reliability, with a Cronbach's α between 0.72 and 0.77. Study 1 (
= 165) regards the mental processing of prior losses in the theater-ticket problem (Tversky and Kahneman, 1981). Study 2 (
= 114) is based on prior work on income source effects (Fogel, 1997) and analyzes mental accounting of prior gains. In both studies, individual differences in mental accounting moderated the effects of the experimental treatments. In an explorative survey conducted for Study 3 (
= 373), the extent of engaging in mental accounting was found to be positively correlated with being female, with conscientiousness, and financial literacy, and negatively related with education and non-planning impulsivity. Identification of individual differences and their correlates adds to existing evidence for some of the core assumptions of mental accounting theory. A practical implication of the findings is that providers of financial services must take individual differences into account when designing trainings and supportive tools for money management.
A framework for tax compliance is suggested in which both the power of tax authorities and trust in the tax authorities are relevant dimensions for understanding enforced and voluntary compliance. ...Dynamic interactions between power and trust are considered. Using the framework as a conceptual tool, factors studied in previous research, such as fines, audit probabilities, tax rate, knowledge, attitudes, norms and fairness are reviewed and discussed with reference to the power and trust dimensions. Using the framework as an operational tool, approaches of responsive regulation to increase tax compliance are discussed.
Surveys on tax compliance and non-compliance often rely on ad hoc formulated items which lack standardization, theoretical background, and empirical validation. We present an inventory to assess ...different intentions of compliance and non-compliance: voluntary versus enforced compliance, tax avoidance, and tax evasion. First, items eligible to differentiate between the intentions of compliance and non-compliance were collected from past research and newly developed, and tested empirically with the aim of producing four validated scales with a clear factorial structure. Second, findings from the first analyses were replicated and validated on the basis of motives of compliance and non-compliance, and on the basis of behaviour in a tax experiment. A standardised inventory is provided which can be used in surveys in order to collect data which are comparable across research focusing on self-reports. The inventory can be used in either of two ways: either in its entirety, or by applying the single scales independently, allowing an economical and fast assessment of different intentions underlying tax behaviour.
► Cross-cultural testing of the slippery slope framework. ► Confirmation of influence of trust and power on tax compliance. ► Dynamic effects of trust on power and vice versa. ► Identification of ...tax-relevant cultural differences.
The slippery slope framework of tax compliance integrates different determinants of tax compliance and assigns them to one of two major dimensions. Accordingly, tax compliance depends on the factors perceived trust in the authorities and perceived power of the authorities, but trust on the one hand fosters voluntary compliance whereas power on the other hand leads to enforced compliance. The present study tested these main assumptions of the slippery slope framework in four European countries differing in terms of cultural and economic settings (Austria, Hungary, Romania and Russia) by presenting participants with different scenarios of trust and power. As predicted, the highest level of intended tax compliance and the lowest level of tax evasion were found in conditions of high trust and high power. In addition, participants in conditions of high trust indicate more voluntary compliance just as participants in conditions of high power indicate higher enforced compliance. The present results support the assumptions of the slippery slope framework and confirm the role of trust and power as important determinants of tax compliance.
•Formalization of ideas from the slippery slope framework by Kirchler (2007).•The model shows importance of two regulation tools: coercive and persuasive power.•Model assumes that taxpayers behaviour ...depends also on prevailing norms.•Actual share of compliance-minded taxpayers results from a strategic interaction.•A share of evasion-minded taxpayers which is larger than 0 and smaller than 1 seems to destabilize the dynamic.
Kirchler, Hoelzl, and Wahl (2008) presented with the so-called ‘slippery slope’ framework a new approach to understand tax compliance. The slippery slope approach supposes two routes to tax compliance: deterrence of tax evasion by audits and fines on the one hand, and building a trusting relationship with taxpayers by services and support on the other hand. In this paper, the slippery slope framework is formalized by assuming two groups of taxpayers: compliance-minded and evasion-minded persons. Defining reaction functions for persons of both groups with respect to coercive and persuasive power instruments of tax authorities, the typical slippery slope picture emerges that characterises the authorities’ work. As a consequence, both groups of policy tools are considered necessary to generate tax compliance. In addition to that, it is shown that coercive and persuasive power may be substitutes or complements to each other, depending of the parameters of the taxpayers’ reaction functions. As a further crucial determinant of tax compliance, the behaviour of the fellow citizens with respect to taxpaying is identified.
A constructive, highly professional 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 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 topics and provide insights for policy strategies.
In this study, we analyze the free verbal associations to the stimuli
and
of 327 medical students. Women and men quotas are characterized by the same
(i.e., preferential treatment based on ...sex/gender). However, women quotas help a low-status group, whereas men quotas help a high-status group. In line with a support paradox, that is, the perception that support for women is less fair and less legitimate than support for men, we expected that students would reject women quotas in academia more vehemently than men quotas. Specifically, we hypothesized that students would have more negative and more emotional associations with women quotas than men quotas. As predicted, students had more negative associations with women quotas than with men quotas. However, students did not have more emotional associations with women quotas than with men quotas. In addition, we explored the semantic content of the free associations to identify specific concerns over each quota. Students perceived women quotas as counterproductive, derogatory, and unfair, whereas they perceived men quotas as beneficial and fair. Concerns over the negative perceptions of quota beneficiaries were associated more frequently with women quotas than men quotas. Potential factors underlying students' perceptions of both quotas are discussed.
Following the classic economic model of tax evasion, taxpayers base their tax decisions on economic determinants, like fine rate and audit probability. Empirical findings on the relationship between ...economic key determinants and tax evasion are inconsistent and suggest that taxpayers may rather rely on their beliefs about tax authority's power. Descriptions of the tax authority's power may affect taxpayers' beliefs and as such tax evasion. Experiment 1 investigates the impact of fines and beliefs regarding tax authority's power on tax evasion. Experiments 2-4 are conducted to examine the effect of varying descriptions about a tax authority's power on participants' beliefs and respective tax evasion. It is investigated whether tax evasion is influenced by the description of an authority wielding coercive power (Experiment 2), legitimate power (Experiment 3), and coercive and legitimate power combined (Experiment 4). Further, it is examined whether a contrast of the description of power (low to high power; high to low power) impacts tax evasion (Experiments 2-4). Results show that the amount of fine does not impact tax payments, whereas participants' beliefs regarding tax authority's power significantly shape compliance decisions. Descriptions of high coercive power as well as high legitimate power affect beliefs about tax authority's power and positively impact tax honesty. This effect still holds if both qualities of power are applied simultaneously. The contrast of descriptions has little impact on tax evasion. The current study indicates that descriptions of the tax authority, e.g., in information brochures and media reports, have more influence on beliefs and tax payments than information on fine rates. Methodically, these considerations become particularly important when descriptions or vignettes are used besides objective information.
Tax payments are enhanced by taxpayers' trust in authorities or by authorities' power leading to voluntary or enforced tax compliance, respectively. A laboratory experiment and an online experiment ...examined these assumptions, manipulating trust in and power of authorities. In Experiment 1, participants paid taxes in twenty periods. Results showed that trust and power positively influence tax payments. Trust increases and power decreases voluntary compliance, whereas power increases and trust decreases enforced compliance. Experiment 2 analyzed the impact of trust and power with self‐employed taxpayers' intentions to pay taxes. The overall pattern of the findings of Experiment 1 were replicated and expanded with strategic behavior; strategic behavior was higher in the case of low trust and high power when compared to that of high trust and high power.
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