Appeals to Social Norms and Taxpayer Compliance

Alm, James; Schulze, William D.; Bose, Carrie von; Yan, Jubo

doi:10.1002/soej.12374

Cited by 13 publications

(12 citation statements)

References 74 publications

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“…There is also some emerging work on how different forms of communication between the tax authorities and the taxpayers may sometimes increase the social norm of compliance (Onu and Oats, ). Even so, the attempt to increase compliance in controlled field experiments by an appeal to social norms has generally been found to have a mixed impact on compliance, with some controlled field experiments finding no impact (Blumenthal et al ., ; Torgler, ; Fellner et al ., ; Castro and Scartascini, ; Ortega and Scartascini, ; Pomeranz, ) and others finding a positive and significant if small effect (Del Carpio, ; Bott et al ., ; Hallsworth et al ., ; Alm et al ., ). The information that tax authorities have on income sources is an essential component of a compliance strategy . Compliance is far greater on income subject to employer withholding and to third‐party information sources than on income not subject to these features.…”

Section: Insights From Empirical Researchmentioning

confidence: 97%

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What Motivates Tax Compliance?

Alm

2018

Journal of Economic Surveys

Self Cite

271

223

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In this paper, I review and assess what we have learned about what motivates individuals to pay -or to not pay -their legally due tax liabilities. I focus on three specific questions. First, what does theory say about what motivates tax compliance? Second, what does the evidence show? Third, how can government use these insights to improve compliance? I conclude with some suggestionsand some predictions -for future research. 356 ALM measure of the individual's constant relative risk aversion. Using the definitions of I C and I N in equations (1) and (2), the expected utility maximization generated by the solution to equation (3) can be solved for the optimum amount of reported income R*. 9 Now suppose that R* is calculated for specific, realistic values of the various parameters. For example, if t = 0.4, f = 2, p = 0.02 and e = 1, then the individual will optimally report no income. Very large values for relative risk aversion are required to generate compliance consistent with actual country experience. When e = 3, reported income is only 14% of true income; when e = 5, it is still only 44%; when e = 10, it is 71%; and e must exceed 30 for compliance to exceed 90%. Even if the probability of detection is as (unrealistically) high as 30% (with t = 0.4 and f = 2), relative risk aversion must exceed 7 to generate compliance over 90%. However, existing field evidence on the coefficient of relative risk aversion using a variety of approaches suggests that e ranges between 1 and 2, and may even be as low as 0 (Friend and Blume, 1975;Hansen and Singleton, 1983;Hall, 1988;Chetty, 2006;Gandelman and Hernandez-Murillo, 2013). Risk aversion must be abnormally large for behaviour to be even roughly comparable to actual observed choices, even in many developing countries with low levels of compliance.Admittedly, there are reasons why this simplistic analysis somewhat overstates the problem with the standard expected utility approach. 10 Consider the United States as an example. First, a standard feature of many individual income tax systems is that a third party (e.g. the individual's employer) reports the relevant part of an individual's taxable income to the tax authority (and often also withholds income taxes on this reported taxable income). This third-party information increases significantly the chances that an individual who underreports income on a filed return will be detected, especially in its combination with employer source-withholding. 11 Second, the 'official' IRS audit rate somewhat understates 'actual' IRS audit policy. In fact, the IRS conducts a range of audits, and for many types of audits, the actual rates are quite high. Third and relatedly, while overall audit rates are quite low, among certain income and occupation classes, they are more frequent. Fourth, the IRS conducts a wide range of audit-type activities, including line matching and requests for information, and these activities are much more frequent. 12 Finally, it is individual perceptions of audit rates that influence behaviour, rather than...

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Section: Insights From Empirical Researchmentioning

confidence: 97%

“…(), Alm et al . (1992a, b, c, , c, d, 2010, , , b, c, d), Alm and McKee (, ), Andrighetto et al . () and Zhang et al .…”

Section: Type Of Income Net Misreporting Percentage (%) Percentage Ofmentioning

confidence: 98%

What Motivates Tax Compliance?

Alm

2018

Journal of Economic Surveys

Self Cite

271

223

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“…Thus, in using the DTPB, it is possible to combine the influencing factors: ISM usage intention, ISM acceptance, social norms regarding ISM usage, and ISM usage ability into one theoretical model. Nevertheless, previous research has shown that social norms can be looked at from two different perspectivesinjunctive and descriptive normsand have different impacts on behaviors (Alm, Schulze, von Bose, & Yan, 2019). Thus, our theoretical model uses the DTPB and extends the DTPB to include both injunctive and descriptive social norms (see Figure 1).…”

Section: A State Of the Researchmentioning

confidence: 99%

How to Reach and Influence Both Users and Non-users of Internal Social Media Technologies

Werling

Maier

2022

EJBMR

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This study investigates potential barriers and supporting factors for employees’ Internal Social Media (ISM) usage intention for not only users but also the harder to reach target group of non-users. Following and extending the Decomposed Theory of Planned Behavior (DTPB), it is assumed that ISM acceptance, superiors’ and peers’ support of ISM, superiors’ and peers’ usage of ISM, and the perceived ISM usage ability will explain employees’ usage intention. Multiple regression analyses revealed that users’ and non-users’ usage intention increases mostly with acceptance. Additionally, for users, peer usage support and behavior, as well as ISM Trainings showed to have an impact on usage intention.

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“…While descriptive social norms enjoy relatively more attention from experimenters in the field, Wenzel (2004), Bobek et al (2007) and Alm et al (2019) suggest that injunctive social norms may also potentially incite the desired behaviour, especially if the persons under the treatment can identify themselves with them. However, if the social norms are in conflict with RBF 14,1 the norms already internalised by the person, they can incite opposite reaction and behaviour (Wenzel, 2004).…”

Section: The Behavioural Approach To Increasing Local Tax and Fees Re...mentioning

confidence: 99%

The effectiveness of behavioural interventions on increasing revenue from local fee

Sloboda

Pavlovský

Sičáková-Beblavá

2020

RBF

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PurposeThe objective was to increase earnings of the city of Prievidza from waste disposal fee by proactive communication – reminder (a letter) and leaflets with targeted framing. The quasi-experiment aims to find out which type of leaflet framing (an injunctive social norm or public good) causes the most effective change in the debtors' behaviour.Design/methodology/approachThe article presents the results of a behavioural quasi-experiment, carried out on a local government level. The effectiveness of the intervention was tested in a quasi-experiment with the sample size 712, which is 35% of all waste disposal fee debtors in Prievidza.FindingsThe intervention that has proven to be the most effective was a reminder together with an injunctive social norm leaflet. It resulted in a 1.7 times higher probability for the debt to be paid. The results also indicate that a reminder is significantly more effective if targeted at debtors who only owe one payment–this group was three times more likely to pay their debt after being exposed to the intervention.Practical implicationsPublic policy recommendation is to primarily target the group of debtors who owe one payment.Originality/valueAnother testing and replication of this experiment design is highly important. Nonetheless, the first testing (field quasi-experiment) shows the potential of using the notification as well as social norm framing. It also appears that self-governments should use notifications to primarily address debtors without a long history of non-payment.

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Appeals to Social Norms and Taxpayer Compliance

Cited by 13 publications

References 74 publications

What Motivates Tax Compliance?

What Motivates Tax Compliance?

How to Reach and Influence Both Users and Non-users of Internal Social Media Technologies

The effectiveness of behavioural interventions on increasing revenue from local fee

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