Trust, Power, and Tax Compliance: Testing the 'Slippery Slope Framework' Among Self-Employed Taxpayers

Abstract

The “slippery slope framework” suggests two main determinants of tax compliance: trust in authorities and power of authorities. When both, trust and power, are low taxpayers aim at maximizing individual payoffs by evading taxes. Increasing power of authorities leads to enforced compliance, whereas boosting trust results in enhanced voluntary compliance. Hence, high compliance can be accomplished either by pronounced trust in authorities or under conditions of strong power of authorities, but the quality of cooperation differs. Testing these assumptions using questionnaire data based on a representative sample of 476 self-employed taxpayers clearly supports the main assumptions of the “slippery slope framework”. In addition, the relation between perceptions of both, procedural justice and voluntary compliance as well as distributive justice and voluntary compliance were found to be mediated by trust. Furthermore, similar effects of both, trust and power were observed with regard to retributive justice and deterrence.