Persuasive Communications: Tax Compliance Enforcement Strategies for Sole Proprietors*

Hasseldine, John; Hite, Peggy A.; James, Simon; Toumi, Marika

doi:10.1506/p207-004l-4205-7nx0

Cited by 123 publications

(96 citation statements)

References 20 publications

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“…In the UK, an evaluation of the advertising campaigns run by Her And third and finally, appeals can be used. Hasseldine et al (2007) examine 7300 sole proprietors in the UK. Comparing the effect of five different letters ranging from a simple assistance offer to a letter stating that their tax return had been pre-selected for audit, they find that appeals resulted in greater compliance.…”

Section: Changing Informal Institutionsmentioning

confidence: 99%

An institutional theory of the informal economy: some lessons from the United Kingdom

Williams

Horodnic

2016

International Journal of Social Economics

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PurposeThe aim of this paper is to propose a new way of explaining participation in the informal economy as resulting from the asymmetry between the codified laws and regulations of a society's formal institutions (government morality) and the norms, values and beliefs of the population that constitute its informal institutions (societal morality). The proposition is that the greater the asymmetry between government morality and societal morality, the greater is the propensity to participate in the informal economy. MethodologyTo evaluate this institutional asymmetry theory, the results are reported of 1,306 face-to-face interviews conducted during 2013 in the United Kingdom. FindingsThe finding is a strong correlation between the degree of institutional asymmetry (measured by tax morale) and participation in the informal economy. The lower the tax morale, the greater is the propensity to participate in the informal economy. Using ordered logistic regression analysis, tax morale is not found to significantly vary by for example social class, employment status or wealth, but there are significant gender, age and spatial variations with men, younger age groups, rural areas and Scotland displaying significantly lower tax morale than women, older people, urban areas and London. Practical ImplicationsRather than continue with the current disincentives policy approach, a new policy approach that reduces the asymmetry between government morality and societal morality is advocated. This requires not only changes in societal morality regarding the acceptability of participating in the informal economy but also changes in how formal institutions operate in order for this to be achieved. Originality/valueThis paper provides a new way of explaining participation in the informal economy and reviews its consequences for understanding and tackling the informal economy in the UK.

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Section: Changing Informal Institutionsmentioning

confidence: 99%

An institutional theory of the informal economy: some lessons from the United Kingdom

Williams

Horodnic

2016

International Journal of Social Economics

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“…Second, cautious minimization of taxes is a significant motivation to hire tax advisors (Hite and McGill 1992;Sakurai and Braithwaite 2003). Third, responses to tax authority appeals differ between self-prepared and professionally prepared tax returns (Hasseldine et al 2007). Fourth, tax preparers are able to exploit tax ambiguities and find tax loopholes (e.g., Klepper and Nagin 1989;Spilker et al 1999;Cords 2009;Leviner 2012).…”

Section: Related Literaturementioning

confidence: 99%

The Effect of Tax Preparation Expenses for Employees: Evidence from Germany

2014

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The effect of tax preparation expenses for employees: evidence from Germany * Kay Blaufus, Leibniz Universität Hannover Frank Hechtner, Free University Berlin Axel Möhlmann, Leibniz Universität Hannover January 1, 2014 Terms of use: Documents in AbstractTax preparation firms advertise their services as a way to save taxes. To investigate this subject, we use a panel of German income tax accounting data, consisting of employees and other taxpayers with non-business income, to explore the relationship between expenses for tax preparation and tax liabilities. We find a negative link with expenses exceeding estimated tax savings. Specifically, one additional Euro yields an estimated tax savings of 72 cents in an OLS regression and 24 cents in a fixed-effects regression. This finding indicates that cross-section estimates are upward biased. The magnitude of the effect implies that tax preparation expenses are not worthwhile from a tax saving perspective alone. In consideration of time savings, combined tax and time savings also do not exceed expenses for any income quintile. The result is robust to various alternative specifications such that in no setting do the pecuniary and time savings exceed the tax preparation expenses. Overall, our findings suggest an important benefit of tax preparation expenses beyond tax and time savings.

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“…One is an appeal to taxpayers' conscience (Hasseldine and Kaplan 1992) and also to feelings of guilt and shame (Erard and Feinstein 1994). Others have suggested more positive help for taxpayers (Hite 1989) and different methods of achieving this -such as the use of television to change taxpayers' attitudes towards fairness and compliance (Roberts 1994) -or using different forms of written communications to improve compliance (Hasseldine et al 2007). It is also possible that taxpayers consider the benefits the community receives from government expenditures (Falkinger 1988).…”

Section: Tax Compliancementioning

confidence: 99%

Developing Tax Policy in a Complex and Changing World

James

Edwards

2008

Economic Analysis and Policy

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Abstract:This paper examines issues affecting the formulation of tax policy through to the development of actual proposals by tax policy-makers. This is done taking account of the possibility that too narrow an approach to this process can produce misleading conclusions and that proposals for tax reform may be inappropriate when the wider context of the tax system as a whole and the environment in which it has to operate are considered. Two issues are used to illustrate this situation -tax compliance and tax simplification. The paper concludes that in developing tax policy it is important to ensure that the wider context is taken into account and it also outlines a practical approach to achieve this aim.

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Persuasive Communications: Tax Compliance Enforcement Strategies for Sole Proprietors*

Cited by 123 publications

References 20 publications

An institutional theory of the informal economy: some lessons from the United Kingdom

An institutional theory of the informal economy: some lessons from the United Kingdom

The Effect of Tax Preparation Expenses for Employees: Evidence from Germany

Developing Tax Policy in a Complex and Changing World

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