Academic journal article Journal for the Study of Religions and Ideologies

How Religions Affect Attitudes toward Ethics of Tax Evasion? a Comparative and Demographic Analysis

Academic journal article Journal for the Study of Religions and Ideologies

How Religions Affect Attitudes toward Ethics of Tax Evasion? a Comparative and Demographic Analysis

Article excerpt

Introduction

The issue of tax evasion has been in existence ever since governments attempted to collect taxes1. Sometimes the penalty for tax evasion was death or other severe punishment, while in other cases penalties were less severe.

People pay taxes out of fear of punishment or because they feel a moral or religious obligation to do so2. Attitudes toward compliance or evasion can also be shaped by culture3. People evade taxes for a variety of reasons. There is often less opposition to tax evasion in cases where the tax system is perceived as unfair, where the government is corrupt or oppressive, where the government violates human rights or where there is inability to pay or where tax rates are considered to be too high4.

This paper reviews the four major views on the ethics of tax evasion that have emerged over the centuries, then goes on to review the theoretical and empirical literature on tax evasion. The final parts of the paper present the results of an empirical study of more than 50,000 participants in 57 countries on attitude toward tax evasion. Attitudes of six major religions are examined and compared. Gender, age and more than a dozen other demographic variables are examined to determine whether the variables are significant.

This paper aims to contribute to the literature in two ways. Firstly, the study examines whether different religions affect attitude toward ethics of tax evasion activities by using the data of the sixth wave (20102014) of the World Values Survey (WVS). The last wave includes countries from very different religious and cultural backgrounds. There are more Eastern, Western and African countries participating in this wave which allows testing the generalizability of previous findings. The last objective as well as the theoretical part of this paper draws on tax evasion literature from disciplines of religious, public finance and sociology in order to establish a solid basis for this study.

The theoretical aspects of this paper would be relevant to both ethicists and policy makers. Policy makers would also be interested in the practical aspects of this study, since one of their goals is probably to reduce the incidence of tax evasion. The first step in reducing the incidence of tax evasion is to understand the reasons why people evade taxes. Once the reasons are known, policy can be changed to address the issue.

Theoretical Background: Four Views on the Ethics of Tax Evasion

Over the centuries, four basic views have emerged on the ethics of tax evasion5. View one takes the position that tax evasion is always, or almost always, unethical. There are basically three underlying rationales for this belief. One rationale is the belief that individuals have a duty to the state to pay whatever taxes the state demands6. This view is especially prevalent in democracies where there is a strong belief that individuals should conform to majority rule. The second rationale for an ethical duty to pay taxes is because the individual has a duty to other members of the community7. This view holds that individuals should not be freeloaders by taking advantage of the services the state provides while not contributing to the payment of those services. A corollary of this belief is the view that if tax dodgers do not pay their fair share, then law-abiding taxpayers must pay more than their fair share. The third rationale is that we owe a duty to God to pay taxes, or, stated differently, God has commanded us to pay our taxes8. This view holds no water among atheists, of course, but the view is strongly held in some religious circles.

View Two might be labeled as the anarchist view. This view holds that there is never any duty to pay taxes because the state is illegitimate, a mere thief that has no moral authority to take anything from anyone9. The state is no more than a mafia that, under democracy, has its leaders chosen by the people. The anarchist literature does not address the ethics of tax evasion directly but rather discusses the relationship of the individual to the state. …

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