Attitudes toward Tax Evasion: A Demographic Study of the Netherlands

By Ross, Adriana M.; McGee, Robert W. | Journal of International Business Research, May 1, 2012 | Go to article overview

Attitudes toward Tax Evasion: A Demographic Study of the Netherlands


Ross, Adriana M., McGee, Robert W., Journal of International Business Research


ABSTRACT

A number of studies have examined the relationship between tax collection and various demographic variables. However, until recently most of those studies have involved a United States sample population. The Internal Revenue Service provides demographic data for researchers on a regular basis. The present study goes beyond those studies in several important ways. For one, it uses data on the Netherlands taken from the World Values database. Not much work has been done on the Netherlands tax or public finance system. Thus, the present study expands on the very limited research done on the Netherlands public finance.

The present study expands on existing literature in at least two other ways as well. For one, it examines how various demographics interact with attitudes toward tax evasion. Secondly, we examine several demographic variables that were not examined in prior studies.

One of the questions in the World Values database asked whether it would be justifiable to cheat on taxes if it were possible to do so. Respondents were asked to choose a number from 1 to 10 to indicate the extent of their support for tax evasion. This study examines those responses, both overall and through the prism of more than 20 demographic variables. A trend analysis is also done to determine whether Netherlands attitudes regarding tax evasion have changed in recent years. A comparison is made with other ethical issues to determine the relative seriousness of tax evasion.

The study found that attitudes toward the justifiability of tax evasion often do vary by demographic variable. Tax evasion was found to be a less serious offense than wife beating, claiming government benefits to which you are not entitled and avoiding a fare on public transport and more serious than suicide, abortion, prostitution, euthanasia, divorce or homosexuality. The trend of opinion on the justifiability of tax evasion has been on a linear path since the first survey was conducted in 1981. Since then, tax evasion has been viewed as an increasingly serious offense over time.

Although the present study focuses on the Netherlands, the methodology used in the present study could serve as a template for research on other countries or regions.

INTRODUCTION

Most studies on taxation are written from a public finance perspective (Hyman, 1999; Kaplow, 2008; Marlow, 1995; Ricardo, 1817/1996; Rosen, 1999). They focus on issues such as how best to raise tax funds, efficiency of collection, optimum tax rates and even optimum tax evasion (Musgrave & Peacock, 1958).

Some public finance scholars have included their own ideological beliefs in a subtle manner. Musgrave (1959, 1986) and his wife (Musgrave & Musgrave, 1976) incorporated their view that the government is justified in adopting any kind of tax system it wants into their work. Their justification for this belief is that taxpayers in a democratic society choose their own representatives; thus, it cannot be said that whatever public finance system they choose can be against the wishes or best interests of their constituency. Their underlying premise is that there is a social contract between the government and the people.

The social contract theory has been discussed in various forms over the centuries (Hobbes, 1651; Locke, 1689; Rousseau, 1762). The argument has been applied to public finance, although scholars have debated some of the specifics. Spooner (1870) denied the existence of any social contract and argued that even if there was a social contract at some point in history, that contract is not binding on future generations because no individual or group of individuals can sign a contract that binds those who are not a party to it.

Another view is that the public finance system a democratically elected government adopts can be justified on moral grounds within certain limits, but there are constitutional limits to what any such government can do in the name of the people. …

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