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Rationality Versus Emotions: The Case of Tax Ethics and Compliance

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  • Boris Maciejovsky

    ()

  • Herbert Schwarzenberger

    ()

  • Erich Kirchler

    ()

Abstract

Businesses that rely heavily on cash transactions have been found to be particularly susceptible to low tax ethics. Recent research indicates that cash is a highly powerful and tempting reward, which elicits a strong emotional response. In this article, we investigate how emotions affect tax ethics in a series of experimental studies. Specifically, we show that affective priming and the ease with which tax information is retrieved moderate tax ethics. We also show that the relative effectiveness of deterrence, such as audit probabilities and tax fines, is moderated by affect. These results point toward a complex picture of tax ethics, requiring a multifaceted policy approach that emphasizes not only enforcement, but also cognitive and affective aspects of human behavior. Copyright Springer Science+Business Media B.V. 2012

Suggested Citation

  • Boris Maciejovsky & Herbert Schwarzenberger & Erich Kirchler, 2012. "Rationality Versus Emotions: The Case of Tax Ethics and Compliance," Journal of Business Ethics, Springer, vol. 109(3), pages 339-350, September.
  • Handle: RePEc:kap:jbuset:v:109:y:2012:i:3:p:339-350
    DOI: 10.1007/s10551-011-1132-2
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Steijvers, Tensie & Niskanen, Mervi, 2014. "Tax aggressiveness in private family firms: An agency perspective," Journal of Family Business Strategy, Elsevier, vol. 5(4), pages 347-357.
    2. Amit Nigam, 2016. "A Conceptual And Factorial Review Of The Determinants Of Income Tax Compliance," Working papers 2016-09-09, Voice of Research.
    3. Korndörfer, Martin & Krumpal, Ivar & Schmukle, Stefan C., 2014. "Measuring and explaining tax evasion: Improving self-reports using the crosswise model," Journal of Economic Psychology, Elsevier, vol. 45(C), pages 18-32.
    4. Casal, Sandro & Mittone, Luigi, 2016. "Social esteem versus social stigma: The role of anonymity in an income reporting game," Journal of Economic Behavior & Organization, Elsevier, vol. 124(C), pages 55-66.
    5. Barbara Culiberg & Domen Bajde, 2014. "Do You Need a Receipt? Exploring Consumer Participation in Consumption Tax Evasion as an Ethical Dilemma," Journal of Business Ethics, Springer, vol. 124(2), pages 271-282, October.
    6. J. J. Klerk, 2017. "Nobody is as Blind as Those Who Cannot Bear to See: Psychoanalytic Perspectives on the Management of Emotions and Moral Blindness," Journal of Business Ethics, Springer, vol. 141(4), pages 745-761, April.
    7. Pickhardt, Michael & Prinz, Aloys, 2014. "Behavioral dynamics of tax evasion – A survey," Journal of Economic Psychology, Elsevier, vol. 40(C), pages 1-19.

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