Opinions on the Ethics of Tax Evasion: A Comparative Study of Utah and New Jersey

Abstract

ABSTRACT The ethics of tax evasion has been discussed sporadically in the theological and philosophical literature for at least 500 years. Over the centuries, three main views evolved on the topic, but the business ethics literature has paid scant attention to this issue, perhaps because of the belief that tax evasion is always unethical. This paper reports the results of an empirical study of opinion in Utah and New Jersey. The arguments that have been made over the centuries to justify tax evasion were ranked to determine which arguments are strongest and which are weakest. Scores were compared between samples to determine whether the responses were significantly different. Keywords: Ethics, Tax evasion INTRODUCTION The vast majority of articles that have been written about tax evasion have been written from the perspective of public finance. They discuss technical aspects of tax evasion and the primary and secondary effects that tax evasion has on an economy. In many cases there is also a discussion about how to prevent or minimize tax evasion. Very few articles discuss ethical aspects of tax evasion, so there is a need for further research which this study is intended to partially address. This study reports on the findings of a survey that was distributed to business students at colleges in Utah and New Jersey. The survey instrument consisted of 18 statements that reflect the three views on the ethics of tax evasion that have emerged over the centuries. Scores were compared to determine whether the responses were significantly different by state. Although many studies have been done on tax compliance, very few have examined compliance, or rather noncompliance, primarily from the perspective of ethics. Most studies on tax evasion look at the issue from a public finance or economics perspective, although ethical issues may be mentioned briefly in passing. The most comprehensive twentieth century work on the ethics of tax evasion was a doctoral thesis written by Martin Crowe [1]. This thesis reviewed the theological and philosophical debate that had been going on, mostly within the Catholic Church, over the previous 500 years. A more recent dissertation on the topic was written by Torgler [2], who also touched on some psychological and philosophical aspects of the issue. There have been a few studies that focus on tax evasion in a particular country. Ethics are sometimes discussed but, more often than not, the focus of the discussion is on government corruption and the reasons why the citizenry does not feel any moral duty to pay taxes to such a government. A number of articles have also been written from various religious perspectives.