A Typology of Tax Compliance in Developing Economies: Empirical Evidence from China's Shoe Industry

Drawing on fieldwork investigations of shoe manufacturers in southeastern China, this article provides empirical evidence for understanding these businesses’ taxpaying practices. We find that since business taxpayers largely regard tax law as illegitimate, instrumental considerations dominate these taxpayers’ decisions to pay or not pay taxes. We then incorporate “structural opportunities for evasion” and “perceived costs of evasion” to develop a two‐by‐two matrix to understand the following types of behavior: aggressive evasion, obliged compliance, strategic compliance, and reciprocal compliance. We argue that this matrix explains why value added tax fraud is widespread in China while voluntary compliance is rare. It also helps to illuminate compliance more generally in developing economies.     

A Moral Appeal for Taxpayer Compliance: The Case for a Mass Media Campaign*

This paper examines the ability of the mass media to enhance compliance with the law by the use of moral appeals. Drawing on the moral development literature and the literature of mass communication effects, we set forth a model for designing mass media campaigns directed at improving compliance with the law. Tax compliance is the issue we analyze. While we determine that no appeal, however well-crafted, is expected to reform all tax offenders, and that some approaches are likely to produce less rather than more compliance, we identify hallmarks of a potentially successful appeal.     

Neutralization and Tax Evasion: How Effective Would a Moral Appeal Be in Improving Compliance to Tax Laws?

The failure of individuals to pay their taxes in full is a serious budgetary problem for the federal government. Existing research (Schwartz and Orleans, 1967; Grasmick and Scott, 1982) suggests that efforts to increase the guilt feelings experienced for tax evasion might improve compliance. However, neutralization theory (Sykes and Matza, 1957) predicts that guilt feelings can be reduced by neutralization strategies which justify guilt-producing behavior, compromising the inhibiting effect of guilt feelings. Our research shows that through the use of neutralization strategies which justify tax evasion the inhibiting effect of guilt feelings is sharply reduced. The implications of this finding for tax compliance programs based on appeals to the moral obligation of paying taxes are discussed.     

DETERRENCE AND MORAL PERSUASION EFFECTS ON CORPORATE TAX COMPLIANCE: FINDINGS FROM A RANDOMIZED CONTROLLED TRIAL*

Previous studies on tax compliance have focused primarily on the tax‐reporting behavior of individuals. This study reports results from a randomized field test of the effects of deterrence and moral persuasion on the tax‐reporting behavior of 4,395 corporations in Israel. Two experimental groups received tax letters, one conveying a deterrent message and the other a moral persuasion message. Three types of measures are used to evaluate compliance based on the magnitude of the difference‐in‐differences of means in 1) gross sales values reported to the authority, 2) tax dollars paid to the authority, and 3) tax deductions. Overall, both deterrence and moral persuasion approaches do not produce statistically significant greater compliance compared with control conditions. These results do not support the ability of a policy of sending tax letters to increase substantively the reporting of true tax liability or tax payments by corporations. However, these results also show that moral persuasion can be counterproductive: Corporations in this experimental group show an increase rather than a decrease in tax deductions, which translates into loss of state revenues. The implications for theory, research, and tax policy are discussed.     

Progressive Taxation,Fairness, and Compliance*

This paper examines the preferences for income tax progressivity, other tax fairness issues, and tax compliance of a national sample of nearly six hundred heads of U.S. households. The results reveal that mean public preferences for fair tax burdens are close to actual effective tax rates; however, the similarity between average preferred and actual effective tax rates masks an underlying schism between three groups: (I) those who believe tax rates should be higher for upper income persons (steep progressives), (2) those who prefer mildly progressive tax rates (mild progressives), and (3) those who believe tax rates should be flat (“flatraters). The analysis includes demographic and fairness profiles associated with tax rate preferences. Attitudes about the overall fairness of the income tax, exchange equity with the federal government, government spending, tax complexity, and tax compliance behavior are examined. In general, respondents' stated preferences for vertical equity approximate the current distribution of the income tax burden, yet there is a relatively high consensus that the income tax is unfair, especially with regard to the ability of wealthy taxpayers to exploit loopholes to avoid paying their fair share, and that respondents regard their own tax burdens as unfair. These results suggest that providing information to the public about the relative amount of income taxes paid by upper income individuals and the effects of recent limitations on “loopholes” could improve public attitudes about the fairness of the income tax and tax compliance.     

Reasonable Grounds Evidence Involving Sexual Violence in Darfur

Internal and international conflicts can often involve a level of impunity that allows sexual violence to persist unchecked by military and political leaders. The recent reversal by an appeals panel at the International Criminal Court of a pretrial decision not to charge President al-Bashir of Sudan with genocide in Darfur offers an important foundation for introducing new types of evidence that can increase the investigation and prosecution of sexual violence during conflicts. The reversal cited the incorrect use of the “beyond a reasonable doubt” standard when the lesser standard of “reasonable grounds” applied. Social science provides methods and measures that can be uniquely used to develop reasonable grounds evidence, for example, to demonstrate the roles of physical perpetrators acting together in horizontal relationships, as well as to establish the indirect participation through vertical relationships of higher-level defendants, in a chain of command of superior responsibility. We illustrate these points by presenting social science evidence of the responsibility of President al-Bashir and middle- and lower-level figures in genocidal violence in Darfur.     

Injustice in Robes: Iniquity and Judicial Accountability*

The paper addresses the question of judges' moral responsibility in an unjust society. How is the “moral” judge to reconcile his perception of justice with a malevolent law? Upon what grounds might judges, and perhaps other public officials, be held morally responsible for their acts or omissions? Does a positivist approach yield a more satisfactory resolution than a natural law or Dworkinian analysis? Could inclusive positivism offer any clues as to how this quandary might be judiciously resolved?     

Enhancing Tax Compliance through Coercive and Legitimate Power of Tax Authorities by Concurrently Diminishing or Facilitating Trust in Tax Authorities

Both coercion, such as strict auditing and the use of fines, and legitimate procedures, such as assistance by tax authorities, are often discussed as means of enhancing tax compliance. However, the psychological mechanisms that determine the effectiveness of each strategy are not clear. Although highly relevant, there is rare empirical literature examining the effects of both strategies applied in combination. It is assumed that coercion decreases implicit trust in tax authorities, leading to the perception of a hostile antagonistic tax climate and enforced tax compliance. Conversely, it is suggested that legitimate power increases reason‐based trust in the tax authorities, leading to the perception of a service climate and eventually to voluntary cooperation. The combination of both strategies is assumed to cause greater levels of intended compliance than each strategy alone. We conducted two experimental studies with convenience samples of 261 taxpayers overall. The studies describe tax authorities as having low or high coercive power (e.g., imposing lenient or severe sanctions) and/or low or high legitimate power (e.g., having nontransparent or transparent procedures). Data analyses provide supportive evidence for the assumptions regarding the impact on intended tax compliance. Coercive power did not reduce implicit trust in tax authorities; however, it had an effect on reason‐based trust, interaction climate, and intended tax compliance if applied solely. When wielded in combination with legitimate power, it had no effect.     

The Figuring of Morality in Adjudication: Not so Special?*

Jurisprudential debate about the grounds of law often focuses on the status of morality. Given the undoubted fact of judicial engagement with morality in legal reasoning, the key question is whether morality legitimately counts as a ground of law. This article seeks to challenge the special status accorded to morality in debates about the grounds of law. The claim I seek to advance is that very often judicial engagement with morality is not different in kind to judicial engagement with other diverse objects of legal reasoning. What the comparison tends to show is that instances of “moral reasoning” in law do not obviously challenge our account of the grounds of law. Rather these instances can be viewed as central case examples of legal reasoning. Conventional grounds of law are left untouched.     

Voluntary versus enforced tax compliance: empirical evidence for the “slippery slope” framework

The “slippery slope” framework is an alternative approach for research in tax compliance that suggests two key variables to obtain taxpayers’ compliance: trust and power. Furthermore, two forms of compliance are distinguished. It is hypothesized that voluntary compliance depends primarily on trust in authorities, whereas enforced compliance is a function of the power attributed to authorities. Using a large data set (N = 3,071) on taxpayers from Austria, the United Kingdom, and the Czech Republic, these hypotheses could be confirmed. Furthermore, whereas voluntary compliance seems to be positively related to age and education, enforced compliance is negatively related to education.     

Consequences of Tit‐for‐Tat Enforcement: Toward a Hippocratic Principle of Regulatory Implementation

The article discusses when tit‐for‐tat enforcement, an important strategy in responsive regulation theory, may generate intended reactions in communities of regulatees. Combining insights from compliance motivation theory, responsive regulation theory, and ethnographic studies of compliance, I hypothesize that tit‐for‐tat enforcement's probability of success depends on regulators’ institutionalized capacity to promote law–morality correspondence. Building such institutionalized capacity—so‐called “embeddedness”—simultaneously increases requirements for inspectorates’ competence. This article addresses three forms of law–morality correspondence: moral support for the law's content, the legislator's authority, and harmony between legal and moral guilt criteria.     

When Crime is not an Option: Inspecting the Moral Filtering of Criminal Action Alternatives

Many theories assume legal compliance stems from rational deliberations about consequences of disobedience. In contrast, morality theories such as Wikström’s Situational Action Theory contend personal morality and moral contexts provide a “filter” prohibiting some people from perceiving and contemplating criminal actions as realistic possibilities. We examine this moral filtering hypothesis using face-to-face household survey data from 573 adults in the Dhaka District of Bangladesh. Results suggest individuals with higher levels of personal morality (moral beliefs; guilt from contemplating violence; moral identity; emotional empathy) and exposure to strong moral settings are less likely to contemplate aggressive and violent actions in response to a provocation. Furthermore, these dimensions of personal and contextual morality appear to be indirectly linked to violent criminal actions through individuals’ tendencies to contemplate aggressive actions when provoked. Overall, our initial inspection of the moral filter hypothesis provides substantial support and highlights areas for theoretical clarification and additional research.     

Trust in Authorities and Power to Enforce Tax Compliance: An Empirical Analysis of the “Slippery Slope Framework”

Tax payments are enhanced by taxpayers' trust in authorities or by authorities' power leading to voluntary or enforced tax compliance, respectively. A laboratory experiment and an online experiment examined these assumptions, manipulating trust in and power of authorities. In Experiment 1, participants paid taxes in twenty periods. Results showed that trust and power positively influence tax payments. Trust increases and power decreases voluntary compliance, whereas power increases and trust decreases enforced compliance. Experiment 2 analyzed the impact of trust and power with self‐employed taxpayers' intentions to pay taxes. The overall pattern of the findings of Experiment 1 were replicated and expanded with strategic behavior; strategic behavior was higher in the case of low trust and high power when compared to that of high trust and high power.     

Contemporary Feminist Perspectives on Social Contract Theory

Abstract. This paper explores two feminist contributions to the analysis of the social contract tradition, comparing the political philosophy of Carole Pateman with the moral theory of Jean Hampton, to ask two questions. First, which points must feminists continue to argue in their critique of the social contract tradition today? The second question is: Can feminists actually draw anything from the social contract tradition today? It argues that Pateman's critique of contractarianism continues to be useful when read in the context of her analysis of “self‐ownership” and subordination rather than as a rewriting of the social contract. Hampton's deployment of a Kantian test for the failure of respect for personhood within domestic (and other) relationships does not undermine Pateman's position. Consideration of how such an ideal can be understood as potentially compatible with Pateman's perspective raises issues about the radical potential within claims for equal respect for personhood. In Hampton's work, widespread “test failure” can be used to indicate that political action rather than moral analysis is required. Hampton assumes that those employing the test are able to abstract themselves sufficiently from their current position to imagine what it would be to be treated as a person. It is argued that this “moral test” should be envisaged as being asked in concert with others, at which point it has the potential to become political action.     

Why Should Justice Be Seen to Be Done?

A well-known maxim instructs that justice should be seen to be done. When “seen” is understood in the sense of “observed”, the maxim is easily defended: open court proceedings protect against arbitrary and partial decisions. However, when “seen” is understood in the sense of “seem,” the maxim is more puzzling, since it is not obvious why courts should concern themselves with people's perceptions that justice has been done. This article addresses this issue, with a particular focus on the social and other benefits that result when judges observe procedures that are widely regarded as fair, especially in criminal trials. The article draws on empirical studies in social psychology that show that when legal authorities treat people in ways that accord with “lay” procedural expectations, they are more likely to view the authorities as legitimate, to cooperate with them, and to obey the law out of an internalized sense of obligation. The article explores the moral significance of these empirical findings, arguing that it would be superficial to see them as a recipe for social stability. The deeper truth conveyed by the empirical research is that relating to people in ways that are widely perceived to be fair is a way for authorities to engage people's moral sentiments and to enliven their virtuous capacity to put aside considerations of self-interest so as to do what is right. This dynamic provides a sound moral foundation for courts to concern themselves with perceptions of justice.     

General Deterrence and Corporate Environmental Behavior*

This research addresses the assumption that “general deterrence” is an important key to enhanced compliance with regulatory laws. Through a survey of 233 firms in several industries in the United States, we sought to answer the following questions: (1) When severe legal penalties are imposed against a violator of environmental laws, do other companies in the same industry actually learn about such “signal cases”? (2) Does knowing about “signal cases” change firms’ compliance‐related behavior? It was found that only 42 percent of respondents could identify the “signal case,” but 89 percent could identify some enforcement actions against other firms, and 63 percent of firms reported having taken some compliance‐related actions in response to learning about such cases. Overall, it is concluded that because most firms are in compliance already (for a variety of other reasons), this form of “explicit general deterrence” knowledge usually serves not to enhance the perceived threat of legal punishment, but as reassurance that compliance is not foolish and as a reminder to check on the reliability of existing compliance routines.     

Teachers' Duty to Report Child Abuse and Neglect and the Paradox of Noncompliance: Relational Theory and “Compliance” in the Human Services

Based on in‐depth interviews with thirty‐eight individuals on the front line of child welfare (educators, mothers, and child protection workers) this study analyzes the attitudes behind educators' acknowledged noncompliance with mandatory reporting of child abuse and neglect by teachers. Regulatory theory posits that “compliance” is affected by a mix of sanctions, capacity, motivation, and the perceptions of legitimacy and moral purpose associated with particular rules. Paradoxically, while the educators in this study were knowledgeable and supportive of the rule in principle, their accounts of reporting decision making were highly contextualized and ambivalent. The interview data suggests that existing theories of compliance may be usefully supplemented with an explicitly relational approach that better accounts for decision making in the contexts of care and dependency that characterize regulatory fields of human services such as education and child welfare.     

Affirmed: A Study of Criminal Appeals and Decision-Making Norms in a California Court of Appeal

The work of state intermediate appellate courts is often described as “correcting legal errors” and “supervising” trial courts. But what do these labels mean in practice? This article explores the intermediate appellate process through a study of criminal appeals in a California Court of Appeal. Part I describes the characteristics and dispositions of criminal appeals. Contrary to popular impression, a conviction was reversed in only about 5 percent of these appeals. To explain the low reversal rate, part II draws upon interviews with justices of the Court of Appeal to examine the institutional norms and perspectives guiding the court's decisions. The basic decision norms described by the justices are norms of affirmance: for example, the harmless error rule and the substantial evidence rule incline the court to affirm despite certain legal errors or factual questions. Moreover, the particularistic approach the court typically takes in its decision making apparently sensitizes it to the substantive characteristics prevailing in criminal appeals: the crimes are serious and there is little doubt about factual guilt. The low reversal rate and the analysis of the court's norms suggest that intermediate appellate review of criminal convictions is narrower and more constrained than the “error correction” and “supervision” labels imply. Part III explores the implications of the case study for appellate policy.     

Splitting the Difference: Modeling Appellate Court Decisions with Mixed Outcomes

In rendering a decision in a particular case, judges are not limited to finding simply for the appellant or for the respondent. Rather, in many cases, they have the option to find for the former on one or more issues and for the latter on one or more other issues. By thus “splitting the difference,” judges can render a judgment that favors both litigants to some degree. What accounts for such mixed outcomes? Several theoretical perspectives provide potential explanations for this phenomenon. First, Galanter (1974) suggests that litigants with greater resources will achieve more favorable outcomes in the courts. Where two high‐resource, repeat‐player litigants meet in the appeals courts, these more sophisticated and successful parties may be able to persuade the court to render decisions with mixed outcomes that at least partially favor each party. Second, split outcomes may result from strategic interactions among the appeals court judges on the decisionmaking panel. Where majority opinion writers seek to accommodate other judges on the panel, split outcomes have the potential to serve as an inducement for more ideologically extreme judges to join the majority opinion. Finally, Shapiro and Stone Sweet ( Stone Sweet 2000; Shapiro & Stone Sweet 2002 ) propose that courts will sometimes split the difference in order to enhance their legitimacy (and ultimately enhance compliance by losing parties). For example, in highly salient cases, where noncompliance would more clearly threaten court legitimacy, judges may be more likely to split the difference in order to mollify even the losing party. We develop an empirical model of mixed outcomes to test these propositions using data available from the U. S. Courts of Appeals Database and find evidence supportive of all three theoretical perspectives.     

Symmetry,Rational Abilities,and the Ought-Implies-Can Principle

In Making Sense of Free Will and Moral Responsibility Dana Nelkin defends the “rational abilities view.” According to this view, agents are responsible for their behavior if and only if they act with the ability to recognize and act for good reasons. It follows that agents who act well are open to praise regardless of whether they could have acted differently, but agents who act badly are open to blame only if they could have acted on the moral reasons that counted against their behavior. I summarize the main themes of Nelkin’s theory of responsibility and offer reasons for rejecting the claim that agents are blameworthy only if they could have responded to moral considerations. It is true that wrongdoers who could not have responded appropriately to moral considerations are often excused from blame, but I argue that not all the forms that such incapacity can take will furnish grounds for excuse. In other words, some circumstances that entail that a wrongdoer cannot respond to moral considerations are compatible with that agent fulfilling conditions that are sufficient for moral responsibility.