February 2, 2009
Lavoie: Cultivating a Compliance Culture: An Alternative Approach for Addressing the Tax Gap
Richard Lavoie (Akron) has posted Cultivating a Compliance Culture: An Alternative Approach for Addressing the Tax Gap on SSRN. Here is the abstract:
This article examines the social science research concerning why individuals comply (or fail to comply) with their taxpaying obligations. The relevant empirical scholarship on the economic, behavioral and psychological aspects of compliance indicates that multiple factors are at work in fostering voluntary compliance with a person's taxpaying obligations and demonstrates that more than just economic self-interest is at work. The confluence of these factors can be viewed as creating a kind of taxpaying ethos, which explains why most Western democracies have a much higher rate of tax compliance than is predicted by purely economic models. Understanding the factors that shape and promote this taxpaying ethos provides valuable insights into the most effective means for fostering voluntary tax compliance. After reviewing the underpinnings that help create a taxpaying ethos, the article examines how this conceptual understanding of tax compliance can be employed practically to help reduce the level of systemic noncompliance (the so called tax gap) by focusing on altering the taxpaying culture in a specific segment of the population (self-employed individuals and small businesses) that has historically shown high levels of noncompliance.
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