Abstract
Tax compliance involves a decision where personal benefits come at the expense of society and its members. We explored the roles of procedural and distributive justice and citizens’ perceptions of the tax authority’s power in stimulating voluntary tax compliance. Distributive and procedural justice have often (but not always) been shown to interact in such a way that high distributive justice or high procedural justice is sufficient to predict positive responses to authorities and the social collective they represent. We examined whether this interaction predicts voluntary (but not enforced) tax compliance, in particular among citizens who perceive the tax authority’s power as high (vs. low). The results of two field studies among Ethiopian (Study 1) and United States (Study 2) taxpayers supported our predictions. With this research we connect the roles of two core social psychological antecedents of tax compliance (i.e., distributive and procedural justice) with that of a deterrent factor (i.e., authority power) and obtain support for the psychological process underlying the Distributive Justice × Procedural Justice interaction in two diverging tax environments.
Highlights
Complying with tax laws and regulations involves a dilemma where personal gains that result from non-compliance come at a cost for society and its members (Kaplan et al, 1997; Chung and Trivedi, 2003; McGee, 2006; Maciejovsky et al, 2012; Molero and Pujol, 2012; Dowling, 2014; Gangl et al, 2015)
By identifying authority power as a relevant moderator of the Distributive Justice × Procedural Justice interaction on voluntary tax compliance, our research presents a direct test of the process that drives this interaction effect (Spencer et al, 2005; MacKinnon and Fairchild, 2009; Jacoby and Sassenberg, 2011)
We argue that the power of the tax authority is a meaningful element of the process underlying the effect of the Distributive Justice × Procedural Justice interaction on voluntary tax compliance
Summary
Complying with tax laws and regulations involves a dilemma where personal gains that result from non-compliance come at a cost for society and its members (Kaplan et al, 1997; Chung and Trivedi, 2003; McGee, 2006; Maciejovsky et al, 2012; Molero and Pujol, 2012; Dowling, 2014; Gangl et al, 2015) This dilemma facing taxpayers has captured the attention of scholars from various disciplines for at least half a century (see Kirchler, 2007 for an overview). This is despite the investigation of the Distributive Justice × Procedural
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