Flying Above the Law and Under the Radar: Instilling a Taxpaying Ethos in Those Playing by Their Own Rules

Richard L. Lavoie, University of Akron Law School

Abstract

Why do most people pay their taxes? What distinguishes them from those who don’t? Can we use those differences to increase tax compliance among those evading their taxes? This article examines the social science research concerning these questions and posits that most Western democracies have a much higher rate of tax compliance than is predicted by purely economic models due to the existence of a pervasive “taxpaying ethos” in these societies. Understanding the factors that shape and promote this taxpaying ethos provides valuable insights into the most effective means for fostering voluntary tax compliance in societies lacking a taxpaying ethos and in aberrant sub-groups within a generally taxpaying culture. After reviewing the building blocks used to craft a taxpaying ethos, the article examines how the level of noncompliance in the United States can be reduced by fostering a strong taxpaying ethos among self-employed individuals and small businesses, a segment of society that has historically shown high levels of tax noncompliance.