Exposure to tax dilemmas deteriorate individuals' self-declared tax morale

Emmanuelle Deglaire, Peter Daly and Fabrice Le Lec
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Emmanuelle Deglaire: EDHEC Business School - Département Comptabilité, Droit, Finance et Economie
Peter Daly: EDHEC - EDHEC Business School - UCL - Université catholique de Lille

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Abstract: This study reports on the impact of exposure to tax dilemmas on tax morale. We focus on young adults in their "impressionable years" and with little or no previous tax exposure in order to estimate the impact of actual (albeit experimental) exposure to tax dilemmas on their self-declared tax morale. First, we ascertain the participants' (N = 385), representation and attitudes towards tax, and second, we observe the impact of facing tax decisions on their present and future level of tax compliance. This allows us to investigate, in the realm of taxation, the generic question of knowing how one's history (and one's decisions) influences one's ethical representations and attitude. Although of less external validity than studies using naturally occurring events or historical periods, the use of an experimental simulation enables us to investigate the three different dimensions that could shape people's personal history: acting, experiencing and observing. Thanks to an interactive and systemic approach, participants are invited to make decisions in a tax context, to experience tax "events" and are given the opportunity to observe both their own behavior, that of others as well as the consequences of those actions, and repeat and test those three different steps several times. We find that the simulation tends to reduce honesty and ethical concerns with respect to taxation, a decrease in tax morale. This reduction seems to be driven by those subjects who were actually facing a tax dilemma and have to make a compliance decision. Other subjects, only observing or experiencing the effects of low tax compliance, are only marginally affected. One possible interpretation is that individuals have an initial overconfidence in their propensity to tax compliance and tax morale, which is challenged by their own decisions in typical dilemmas.

Keywords: Tax ethics; Tax avoidance; Tax dilemma; Tax morale; Tax compliance; Tax experiment; Life experience (search for similar items in EconPapers)
Date: 2021-09-23
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Published in Economics of Governance, 2021, 22 (4), pp.363-397. ⟨10.1007/s10101-021-00262-x⟩

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Journal Article: Exposure to tax dilemmas deteriorate individuals' self-declared tax morale (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03593787

DOI: 10.1007/s10101-021-00262-x

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