Tax morale affects tax compliance : evidence from surveys and an artefactual field experiment

Our working hypotheses is that cross-cultural differences in tax compliance behaviour have foundations in the institutions of tax administration and citizen assessment of the quality of governance. Tax compliance being a complex behavioural issue. Its investigation requires use of a variety of methods and data sources. Results from artefactual field experiments conducted in countries with substantially different political histories and records of governance quality demondtrate that observed differences in tax compliance levels persist over alternative levels of enforcement. The experimental results are shown to be robust by replicating them for the same countries using survey response measures of tax compliance.

Tax morale and conditional cooperation

Why so many people pay their taxes, even though fines and audit probability are low, is a central question in the tax compliance literature. Positing a homo oeconomicus having a refined motivation structure sheds light on this puzzle. This paper provides empirical evidence for the relevance of conditional cooperation, using survey data from 30 West and East European countries. We find a high correlation between perceived tax evasion and tax morale. The results remain robust after exploiting endogeneity and conducting several robustness tests. We also observe a strong positive correlation between institutional quality and tax mmorale. Keywords: Tax morale; Tax compliance; Tax evasion; Pro-social behavior; Institutions

A Knight without a Sword? The Effects of Audit Courts on Tax Morale

The intention of this paper is to analyse how audit courts affect tax morale, controlling in a multivariate analysis for a broad variety of potential factors. Switzerland, with its variety of audit-court competence among the cantons, has been analysed. With data from the ISSP [1998] (Swiss data 1999), evidence has been found that higher audit-court competence has a significantly positive effect on tax morale. Thus, the results in Switzerland suggest that in the cantons where audit courts are not just knights without swords; they help improve taxpayers' tax morale and thus citizens' intrinsic motivation to pay taxes.

Gender and public attitude toward corruption and tax evasion

The topics of corruption and tax evasion have attracted significant attention in the literature in recent years. We build on that literature by investigating empirically: (1) whether attitudes toward corruption and tax evasion vary systematically with gender and (2) whether gender differences decline as men and women face similar opportunities for illicit behavior. We use data on eight Western European countries from the World Values Survey and the European Values Survey. The results reveal significantly greater aversion to corruption and tax evasion among women. This holds across countries and time, and across numerous empirical specifications. (JEL H260, D730, J160, Z130)

The impact of tax morale and institutional quality on the shadow economy

This paper uses a multivariate analysis to examine how countries‘ tax morale and institutional quality affect the shadow economy. The literature strongly emphasizes the quantitative importance of these factors in understanding the level of and changes in the shadow economy. Newly available data sources offer the unique opportunity to further illuminate a topic that has received increased attention. After controlling for a variety of potential factors, we find strong support that a higher tax morale and a higher institutional quality lead to a smaller shadow economy.

Local autonomy, tax morale, and the shadow economy

Policymakers often propose strict enforcement strategies to fight the shadow economy and to increase tax morale. However, there is an alternative bottom-up approach that decentralises political power to those who are close to the problems. This paper analyses the relationship with local autonomy. We use data on tax morale at the individual level and macro data on the size of the shadow economy to analyse the relevance of local autonomy and compliance in Switzerland. The findings suggest that there is a positive (negative) relationship between local autonomy and tax morale (size of the shadow economy).

Serious tax non compliance : motivation and guardianship

This article reviews what international evidence exists on the impact of civil and criminal sanctions upon serious tax noncompliance by individuals. This construct lacks sharp definitional boundaries but includes large tax fraud and large-scale evasion that are not dealt with as fraud. Although substantial research and theory have been developed on general tax evasion and compliance, their conclusions might not apply to large-scale intentional fraudsters. No scientifically defensible studies directly compared civil and criminal sanctions for tax fraud, although one U.S. study reported that significantly enhanced criminal sanctions have more effects than enhanced audit levels. Prosecution is public, whereas administrative penalties are confidential, and this fact encourages those caught to pay heavy penalties to avoid publicity, a criminal record, and imprisonment.

Persistence of income inequality : does child mortality matter?

Many developing countries are afflicted by persistent inequality in the distribution of income. While a growing body of literature emphasizes differential fertility as a channel through which income inequality persists, this paper investigates differential child mortality – differences in the incidence of child mortality across socioeconomic groups – as a critical link in this regard. Using evidence from cross-country data to evaluate this linkage, we find that differential child mortality serves as a stronger channel than differential fertility in the transmission of income inequality over time. We use random effects and generalized estimating equations techniques to account for temporal correlation within countries. The results are robust to the use of an alternate definition of fertility that reflects parental preference for children instead of realized fertility.

Critical literacy finds a "Place": Writing and social action in a low-income Australian grade 2/3 classroom

In a study of socioeconomically disadvantaged children's acquisition of school literacies, a university research team investigated how a group of teachers negotiated critical literacies and explored notions of social power with elementary children in a suburban school located in an area of high poverty. Here we focus on a grade 2/3 classroom where the teacher and children became involved in a local urban renewal project and on how in the process the children wrote about place and power. Using the students' concerns about their neighborhood, the teacher engaged her class in a critical literacy project that not only involved a complex set of literate practices but also taught the children about power and the possibilities for local civic action. In particular, we discuss examples of children's drawing and writing about their neighborhoods and their lives. We explore how children's writing and drawing might be key elements in developing "critical literacies" in elementary school settings. We consider how such classroom writing can be a mediator of emotions, intellectual and academic learning, social practice, and political activism.

Parent decisions regarding paid work and care of the child

Australia has witnessed a continual increase in maternal employment over the past two decades, which has placed focus on child care- its effects on the child and on early childhood education and care policy and provision. The engagement of women in the paid workforce contributes to national economic development, and is recognised in government policy incentives such as cash subsidies and tax relief for child care fees. These incentives are targeted towards mothers, to encourage them to engage in paid work. Making a contribution to the family’s economy and to a mother’s economic self sufficiency are two key drivers for women’s engagement in satisfying paid work. Many women also seek to maintain a personal investment in the development of their career, simultaneously ensuring that the child is experiencing suitable care. Policies that support women’s choices for satisfying workforce engagement and care arrangements are prudent for ensuring productivity of the economy as well as for enhancing the wellbeing of parents and children (OECD, 2007). Policies that provide family friendly employment arrangements, paid parental leave, and child care support, directly affect maternal employment decisions. Availability of family friendly employment policies is viewed as one way to not only promote gender equity in employment opportunities but also support the wellbeing of children and families (OECD, 2007). Yet there are not comprehensive and coherent policies on work and family in Australia. Australia is due to implement its first paid parental leave scheme in January, 2011. At the time of the data collection of this research, June 2007 to December 2008, Australia had no statutory provision for paid parental leave. To date, most research has focused on the consequences of paid work and care decisions made by women. Far less is known about the processes of decision-making and reasons underlying women’s choices. Investigation of what is most salient for women as they make decisions regarding engagement in paid work, and care for their child is important in order to inform policy and practices related to parental leave, family friendly employment and care for the child. This prospective longitudinal research was of 124 Australian expectant first-time mothers who completed questionnaires in their third trimester of pregnancy, and again at six and twelve months postpartum. First-time expectant mothers' decisions regarding engaging in paid work and selecting care for their child represent those of a group who are invested in motherhood and have usually had direct experience of engaging in paid work. They therefore provide an important insight into society’s idealised views about motherhood and the emotional and social uncertainty of making personal decisions where the consequences of such decisions are unknown. These decisions reflect public beliefs about the role of women in contributing to the country’s productivity and decisions about providing for the economic and emotional care needs of their family. As so little is known about the reasoning and processes of decision-making of women’s choices regarding paid work and care of the child this research was designed to capture expectant first-time mother’s preferred options for engaging in paid work and the care of their child, and investigate their actual decisions made at six and 12 months postpartum. To capture preferred options, decisions and outcomes of decisions regarding paid work and care of the child a prospective longitudinal research design was utilised. This design had three important components that addressed key limitations in the extant literature. First the research commenced in pregnancy in order to investigate preferences and beliefs about paid work and care and to examine baseline data that may influence decisions made as the women returned to paid work. Second the research involved longitudinal tracking from the antenatal time point to six and 12 months postpartum in order to identify the influences on decisions made. Third the research measured outcomes of the decisions made at each time point. This research examined the intentions, preferences, beliefs, influences, and outcomes of the decisions about engagement in paid work and choice of care. The analyses examined factors predicting return to paid work, the timing of return and extent of engagement in paid work; the care for the child; satisfaction with paid work; satisfaction with care for the child, motherhood and fulfilment; and maternal wellbeing at six and 12 months postpartum. The factors of interest were both rational/economic (availability and extent of paid and unpaid maternity leave; flexible work patterns) and emotional/affective (career satisfaction, investment in motherhood, and concern with quality of care for the child). Results indicated a group preference, and realisation for, return to paid work within the first year after the birth of a child but with reduction in hours to part-time. Most women saw paid work not only as a source of income but also as source of personal satisfaction. There were four key themes arising from this research. First, the women strived to feel emotionally secure when deciding about engaging in paid work and care of the child. To achieve emotional security women made their decisions for paid work and care of the child differently. A woman’s decision for maternal employment is a function of her personal beliefs, preferences and context regarding paid work and care of the child. She adjusts her established work identity with her new identity as a mother. The second key theme from this research is that the women made their decisions for maternal employment in response to their personal context and there were different levels of opportunities between the women’s choices. There is inequity of entitlement regarding work conditions associated with a woman’s education level. This has implications for the woman’s engagement in paid work, and her child’s health and wellbeing. The third key theme is that the quality of the child’s care mattered to the women in the research. They preferred care provided by parents and/or relatives more than any other types of care. The fourth key theme identified that satisfaction and wellbeing outcomes experienced as a result of maternal employment decisions were a complex interaction between multiple factors that change across time with the ongoing development of the mother’s identity, and the development of the child. The implications for policy within Australia are that the employment of mothers in the workforce necessitates that non-parental care becomes a public concern, where there is universal access to good quality affordable care for every child, not just for those who can afford it. This is equitable and represents real choice while supporting the rights of the child (Thorpe, Cloney & Tayler, 2010), protecting and promoting the public interest (Cleveland & Krashinsky, 2010). Children’s health and wellbeing will be supported (Moore & Oberklaid, 2010) while children are in non-parental care, and they will be exposed to environments and experiences that support their learning and development. The significant design of the research enabled the trajectories of first-time expectant women to be tracked from the antenatal point to 12 months postpartum. But there were limitations: the small sample size, the over-representation of the sample being highly educated and the nature of a longitudinal research that is set within the economic, social and political context at that time. These limitations are discussed in relation to suggestions for future research.