Limits...
Does the sole description of a tax authority affect tax evasion?--the impact of described coercive and legitimate power.

Hartl B, Hofmann E, Gangl K, Hartner-Tiefenthaler M, Kirchler E - PLoS ONE (2015)

Bottom Line: Results show that the amount of fine does not impact tax payments, whereas participants' beliefs regarding tax authority's power significantly shape compliance decisions.This effect still holds if both qualities of power are applied simultaneously.Methodically, these considerations become particularly important when descriptions or vignettes are used besides objective information.

View Article: PubMed Central - PubMed

Affiliation: University of Vienna, Vienna, Austria.

ABSTRACT
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.

No MeSH data available.


Related in: MedlinePlus

Forest Plot of regression coefficients for coercive power and legitimate power.
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pone.0123355.g004: Forest Plot of regression coefficients for coercive power and legitimate power.

Mentions: An additional objective of the current paper was to investigate possible interaction effects of tax authority’s power. A very important and new finding is that the effect of coercive and legitimate power on tax payments still holds when both qualities of power are applied. However, unlike assumed by previous studies on intended tax compliance [10], legitimate power did not alter the effect of coercive power. Both qualities of power have a similar strong and independent impact on tax compliance (Fig 4).


Does the sole description of a tax authority affect tax evasion?--the impact of described coercive and legitimate power.

Hartl B, Hofmann E, Gangl K, Hartner-Tiefenthaler M, Kirchler E - PLoS ONE (2015)

Forest Plot of regression coefficients for coercive power and legitimate power.
© Copyright Policy
Related In: Results  -  Collection

License
Show All Figures
getmorefigures.php?uid=PMC4414547&req=5

pone.0123355.g004: Forest Plot of regression coefficients for coercive power and legitimate power.
Mentions: An additional objective of the current paper was to investigate possible interaction effects of tax authority’s power. A very important and new finding is that the effect of coercive and legitimate power on tax payments still holds when both qualities of power are applied. However, unlike assumed by previous studies on intended tax compliance [10], legitimate power did not alter the effect of coercive power. Both qualities of power have a similar strong and independent impact on tax compliance (Fig 4).

Bottom Line: Results show that the amount of fine does not impact tax payments, whereas participants' beliefs regarding tax authority's power significantly shape compliance decisions.This effect still holds if both qualities of power are applied simultaneously.Methodically, these considerations become particularly important when descriptions or vignettes are used besides objective information.

View Article: PubMed Central - PubMed

Affiliation: University of Vienna, Vienna, Austria.

ABSTRACT
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.

No MeSH data available.


Related in: MedlinePlus