Determinants of tax evasion and compliance

The problem of tax evasion and subsequent revenue loss is an important one for our nation. Noncompliance with tax laws causes multibillion dollar annual losses for the U.S. treasury. An investigation of psychological variables is suggested as the most promising route to increase tax compliance. Hence, a review of the legal, economic, sociological, and psychological literature concerning the motivation and causes of noncompliance with tax laws is presented. Theoretical models and empirical studies addressing the issue of tax evasion are reviewed. An individual's feelings of equity and sense of norm commitment may be the crucial factors in the decision to comply or evade legally mandated taxes, superseding the notion of sanctions as the most effective deterrent. A legal reasoning model is one suggested alternative in the search for a causal explanation of noncompliance.     

The Weak Probability of Punishment for Environmental Offenses and Deterrence of Environmental Offenders: A Discussion Based on USEPA Criminal Cases, 1983–2013

Numerous studies observe a decrease in environmental crimes following imposition of fines or penalties potentially due to general and specific deterrent effects. Here we explore whether those deterrent effects appear plausible by estimating the probability of a USEPA criminal case occurring each year between 1983 through 2013. Our analysis shows that there is an extremely low probability of an environmental crime case being prosecuted criminally by USEPA, casting doubt that these criminal cases are sufficiently widespread to generate a deterrent effect. We suggested that alternative theoretical orientations and policy initiatives be employed in studying and responding to environmental infractions.     

Gender,Status, and Tax Offenses

Current literature on tax evasion finds that compared to women, men are more likely to engage in tax evasion. This study examines how expectation states theory helps explain this gender difference by investigating the relationship between status and compliance to authority using a secondary analysis of ICPSR data on the Monitoring of Federal Criminal Sentences. We hypothesize that the effect of gender on the odds of being convicted for a tax offense compared to any other white collar crime will decrease when controlling for other diffuse status characteristics. Results from a series of multivariate regression models support this hypothesis.     

An Argument for Compulsory Vaccination: The Taxation Analogy

I argue that there are significant moral reasons in addition to harm prevention for making vaccination against certain common infectious diseases compulsory. My argument is based on an analogy between vaccine refusal and tax evasion. First, I discuss some of the arguments for compulsory vaccination that are based on considerations of the risk of harm that the non-vaccinated would pose on others; I will suggest that the strength of such arguments is contingent upon circumstances and that in order to provide the strongest defence possible of compulsory vaccination, such arguments need to be supplemented by additional arguments. I will then offer my additional argument for compulsory vaccination: I will argue that in both cases of vaccine refusal and of tax evasion individuals fail to make their fair contribution to important social and public goods, regardless of whether each individual contribution ‘makes a difference’. While fairness considerations have sometimes been used to support a moral duty to vaccinate, they have not been appealed to in order to argue for a legal duty to vaccinate. I will suggest that this is due, among other things, to a misapplication of the principle of the least restrictive alternative in public health. Finally, I will address nine possible objections to my argument.     

Exposure to national flags reduces tax evasion: Evidence from the United States,Australia, and Britain

There have been numerous theories from numerous academic fields explaining why individuals engage in tax evasion. Drawing broadly on Social Identity Theory, we predict that exposure to one's national flag can reduce tax evasion by making salient one's national identity, motivating one to sacrifice one's self-interests for one's country—which would presumably include paying one's fair share of taxes. In three experiments, we found that exposure to American, Australian, and British flags reduced Americans', Australians', and Britons' tax evasion in financially incentivized tasks (Experiments 1, 3) and increased tax-paying attitudes (Experiment 2). The effects arose because flag primes made salient participants' national identities that then motivated them to help their country. We ruled out social norms and trust in authorities as alternative explanations. As such, flag primes might reduce tax evasion and in doing so improve the economic and societal welfare of a country.     

Variable Credibility Threats: A Procedure for the Enhancement of Deterrence Effectiveness1

This experiment evaluated a procedure whereby tax evasions can be more effectively deterred by dividing the taxpayers' population into two, high- and low-audit probability, categories. The procedure employs a rule that assigns tax evaders to the high-audit probability category and assigns those who abide by the law to a low-audit probability category. A simple empirical simulation showed that the “variable probabilities” procedure prevented tax evasions more effectively than an alternative, “fixed probability” procedure, in which the same audit probability applied to all individuals, regardless of their past record.     

The applicability of a helicopter patrol procedure to diverse areas: A cost-benefit evaluation

The residential burglary deterrent effects of a helicopter patrol procedure were investigated in four separate areas with a multiple baseline technology. The helicopter was flown during an 8:00 a.m. to 4:00 p.m. period in two high density population areas of approximately 9.82 and 14.71 square miles and two low density population areas of 117.49 and 89.97 square miles. The helicopter patrol reduced residential burglaries without crime displacement in the two high density areas but had no deterrent effects in the low density areas. The costs of the helicopter patrol were justified by the benefits that resulted from the reduced home burglaries in the two high density areas. Because the helicopter patrol program is funded by general tax revenues, there is a disparity between those people paying for the procedure (all residents of Nashville) and those citizens that receive the burglary deterrent benefits (only residents of high-density areas). This distribution of benefit limitation suggests two courses of action: (1) The helicopter should be flown only in high population density areas even though the low population density areas are also victimized by high burglary rates. (2) A more comprehensive burglary reduction program must be developed so that effective deterrence can be realized in low density areas. These latter techniques would supplement helicopter patrol strategies and thus form a comprehensive burglary deterrent package that has an equitable benefit distribution.     

PUNISHMENT AS DETERRENCE: REPLY TO SPRAGUE

In my 'A Deterrence Theory of Punishment', I argued that a deterrence system of punishment can avoid the charge that it illegitimately uses offenders if its punishments are carried out 'quasi-automatically': threats are issued by a legislature for deterrent purposes, but those who carry out the punishments have no authority to take deterrent considerations into account. Sprague has objected that under such a system, those who carry out punishments will be unable to justify their actions. I reply that if it is justifiable to set up the system in this way in the first place, then this justification will transmit to all actions carried out under it; and that it is justifiable to set up an institution of punishment in this way.     

Consumer Boycotts as Instruments for Structural Change

Consumer boycotts have become a frequent form of social protest in the digital age. The corporate malpractices motivating them are varied, including environmental pollution, lack of minimum labour standards, severe mistreatment of animals, lobbying and misinformation campaigns, collaboration or complicity with illegitimate political regimes, and systematic tax evasion and tax fraud. In this article, I argue that organised consumer boycotts should be regarded as a legitimate and purposeful instrument for structural change, provided they conform to a number of normative criteria. In order to show this, the practice and empirical context of consumer boycotts are first outlined. I then lay out and refute three general objections to this practice. Although each of these objections fails, their discussion generates insights concerning the normative standards with which boycotters must comply if they want their campaigns to be both legitimate and successful. These normative criteria are detailed along the lines of two guiding principles, proportionality and transparency. In the final step, I elaborate on structural change as the deeper purpose of consumer boycotts.     

Convenience orientation and white-collar criminogenity: an empirical study

The theory of convenience suggests that white-collar crime is committed in situations where alternative legitimate actions to avoid problems are more painful and stressful. The extent to which individuals in privileged positions choose to break the law in difficult situations is dependent on their convenience orientation. For example, people with a strong convenience orientation can have a tendency to believe that bankruptcy might be avoided through tax evasion and bank fraud. However, the empirical study in this article provides limited support for the suggestion that convenience orientation has a direct influence on the propensity to crime in terms of criminogenity. Rather, there can be several statistically significant effects from convenience that are indirectly related to criminogenity. The most significant effect is that more conveniently oriented respondents believe that financial crime can solve problems and contribute to exploit possibilities.     

Public opinion and the tax evasion trial of Reverend Moon

This paper presents the results of a survey of a random sample of 1,000 people taken from the Southern Judicial District of New York to measure the amount of knowledge about and bias toward the Reverend Moon prior to his trial on tax evasion charges. The survey was completed as part of the pretrial preparation by Reverend Moon, and was used to support his motion for a bench trial, instead of having the case tried before a jury. The survey revealed very high levels of knowledge about the Church and Reverend Moon, as well as a strong negative bias toward both. Implications of these results and the outcome of the actual trial for the jury system and for religion and religionists is discussed.     

Exploring alternative deterrents to emotional intensity: Anticipated happiness,distraction, and sadness

A recent theory of emotional intensity (Brehm, 1999) argues that emotions are functionally identical to motivational states. Like motivational states, the intensity of an emotion should be a joint function of the importance of instigating events and the magnitude of deterrence to the emotion. “Deterrence” is definable as impediments or forces that interfere with the experience or expression of the emotion?reasons for not feeling what one is feeling. When experiencing an emotion, a person will feel it more intensely as the reasons for not feeling that emotion increase, up to a point. When great enough, the reasons for not feeling the emotion overwhelm it and reduce it to a low level. The deterrents investigated thus far have all involved events whose valence opposes the emotion's valence. Two experiments explore the breadth of events that have deterrent power. The first was designed to see if merely anticipating an event of opposite valence has a deterrent effect on an emotion. The second explored whether an affectively neutral stimulus (background noise) would also have deterrent effects. The results of the first experiment partially supported the theory, whereas the results of the second provided complete support.     

Redistributive Taxation, Self-Ownership and the Fruit of Labour

Libertarians such as Nozick have argued that any redistributive tax scheme intended to achieve and maintain an egalitarian distributive pattern will violate self-ownership. Furthermore, since self-ownership is a central component of the idea of freedom, instituting an egalitarian distribution makes a society less rather than more free. All this turns on the claim, accepted by both libertarians and their critics, that a redistributive tax will violate self-ownership because it must expropriate the fruit of a person's labour. I show here that there is no reason to accept this claim. The libertarian argument works only if the fruit of one's labour must be understood to include everything that a person produces through his labour. But there is an alternative reading of the fruit of labour which identifies it with that subset of the total product of one's labour which is due to his choices rather than luck. I argue that this reading is plausible, that there is nothing in the concept of self-ownership which disallows it, and that if it is adopted, a redistributive tax need not automatically expropriate the fruit of one's labour. Consequently there is no necessary inconsistency between redistributive taxation and self-ownership, and so egalitarians can endorse the latter idea.     

The California drought: A quasi-experimental analysis of social policy

The effect of fines for failure to conserve water during the California drought of 1976 to 1978 was evaluated in a retrospectively arranged multiple-baseline design across three San Francisco Bay area cities. The data indicated that, on a community level, significant savings of water occurred regardless of whether fines were introduced or not. However, on an individual level, fines appeared to have an effect on private, as opposed to commercial or industrial, consumers who had received at least one fine. The limitations imposed on these conclusions by the quasi-experimental nature of the design were highlighted. Possible reasons for water conservation in the absence of fines were discussed within the framework of stimulus control. It was suggested that an area for future research should be the delineation of stimulus parameters involved in producing behavior change in entire communities.     

Improving payment of traffic fines with financial incentives: Discounts vs. penalties

The effective enforcement of traffic laws is critical for improved road safety outcomes. Decisions to follow traffic rules and pay fines are influenced by formal institutions (e.g. laws, court summons, and fines) as well as informal institutions (e.g. norms and aspects of culture). Formal and informal institutions create incentives that should be designed to steer individuals’ behaviour towards desired outcomes. Unfortunately, there is no reason to believe that the institutions to deal with traffic violations in South Africa currently create effective incentives. This paper discusses the findings of a controlled laboratory experiment, conducted with a sample of university students, that tested the efficacy of different financial incentives that may influence the payment of traffic fines. An early payment discount was compared to a late payment penalty (used in other countries, for example, some states in the USA), and to the absence of any incentives. Furthermore, we examined whether the willingness to settle fines is sensitive to the likelihood of detection by the authorities. We found that introducing financial incentives significantly increases voluntary payment of fines, irrespective of whether immediate payment is encouraged with a discount or late payment is discouraged with a surcharge. In addition, subjects are more sensitive to the likelihood of detection when financial incentives are present.     

War Crimes,Punishment and the Burden of Proof

This paper argues that there is a default presumption that punishment has some deterrent effect, and that the burden of proof is upon those who allege that the costs of any particular penal system are insufficient to offset its deterrent benefits. This burden of proof transmits to the discussion of international law, with the conclusion that it is those who oppose international jurisdiction, rather than their opponents, who must prove their position. This they have so far failed to do.     

Effect of superfluous deterrence on the perception of others

T. D. Wilson and G. D. Lassiter (1982, Journal of Personality and Social Psychology, 42, 811–819) established that superfluous deterrence could lead to undesirable changes in a person's self-perception. The present research extends their findings by demonstrating that superfluous deterrence can have a detrimental effect on the perception of others as well. In the first study, 57 undergraduates read one of three accounts of an actor who did not cheat in a situation in which there was no intrinsic reason to do so. In one account a severe deterrent against cheating was mentioned, in a second a mild deterrent against cheating was mentioned, and in the third no deterrent against cheating was mentioned. Subjects in the severe-deterrent condition subsequently perceived the actor to be more likely to cheat in a future constraint-free situation than did subjects in the mild-deterrent condition who, in turn, perceived the actor to be more likely to cheat than did subjects in the no-deterrent condition. A mediation analysis provided strong evidence that this effect was a consequence of attributional processes. That is, when external constraints were mentioned, subjects discounted internal reasons for why the actor did not cheat, thereby causing them to perceive him as more inclined to cheat in a subsequent constraint-free situation. Study 2 replicated these results and ruled out alternative interpretations. Theoretical and practical implications of the present research are discussed.     

A Deterrence Theory of Punishment

I start from the presupposition that the use of force against another is justified only in self-defence or in defence of others against aggression. If so, the main work of justifying punishment must rely on its deterrent effect, since most punishments have no other significant self-defensive effect. It has often been objected to the deterrent justification of punishment that it commits us to using offenders unacceptably, and that it is unable to deliver acceptable limits on punishment. I describe a sort of deterrent theory which can avoid both of these objections.     

Four types of fare evasion: A qualitative study from Melbourne,Australia

Fare evasion on public transport can reduce revenue by millions of dollars, undermining the financial viability of transit. However little research examines how public transport users think about fare evasion or attempts to understand why people fare evade. This paper presents the results of a program of qualitative research conducted in Melbourne, Australia to understand the attitudes toward and motivations behind fare evasion. A total of 67 people participated in face-to-face or online focus groups.Results established a spectrum of perceived circumstances where someone might travel without a valid ticket. ‘Fare evasion’ was considered to be at only one end of that spectrum. The degree of intent to evade was a critical factor explaining the severity of fare evasion from user perspectives. People’s attitudes toward fare evasion differed significantly; four key attitude segments were uncovered based on the attitudes and behaviours that group members tended to share. These included 1. ‘Fare evasion is wrong – the accidental evader’ who held strong views against fare evasion, 2. The ‘it’s not my fault’ evader who meant to pay but sometimes find themselves fare evading due to barriers to payment, 3. The ‘calculated risk-taker’ evader who deliberately fare evade if they think the reward outweighs risk and 4. ‘Career evaders’ who always fare evade. Attitudes, feelings and motivations for these segments are described and implications for revenue protection policy are discussed.     

Moral violations reduce oral consumption

Consumers frequently encounter moral violations in everyday life. They watch movies and television shows about crime and deception, hear news reports of corporate fraud and tax evasion, and hear gossip about cheaters and thieves. How does exposure to moral violations influence consumption? Because moral violations arouse disgust and because disgust is an evolutionarily important signal of contamination that should provoke a multi-modal response, we hypothesize that moral violations affect a key behavioral response to disgust: reduced oral consumption. In three experiments, compared with those in control conditions, people drank less water and chocolate milk while (a) watching a film portraying the moral violations of incest, (b) writing about moral violations of cheating or theft, and (c) listening to a report about fraud and manipulation. These findings imply that “moral disgust” influences consumption in ways similar to core disgust, and thus provide evidence for the associations between moral violations, emotions, and consumer behavior.