Peers, Morality, and Socioeconomic Status: An Analysis of the Influence of Peer Groups on Individual Income Tax Compliance

• In Event: Tax

Abstract

Tax compliance, or lack there of, has been a consistent public policy topic for many years. Based on the latest annual tax gap estimates, the IRS determined an estimated tax gap of about $458 billion. The majority of the tax gap (70%) relates to the individual income tax. Tax compliance literature historically focused on the impact of economic factors on taxpayer behavior. More recent research has begun to incorporate moral, psychological and social attributes of human behavior in the quest to understand individual income tax compliance (Roth 1989, Kirchler 2007). This study has a specific focus to expand knowledge regarding the influence of peers. Through a 3 (peer group) x 2 (income type) experimental tax task, this study intends to gain more understanding the effects of peer groups on individual tax compliance behavior. Both tax morality and socioeconomics are explored as potential moderators of the relationship between peers and income tax compliance.

Author

• Mary B Sasmaz, Case Western Reserve University