On the Determinants of Tax Evasion Justification

Resumen

The classical Allingham-Sandmo-Yitzhaki model explains tax evasion behavior based on the probability of being discovered, the amount of the fine imposed and the level of risk aversion. Nonetheless, empirical studies show that the decision and the level of tax evasion depends also on non economic considerations, usually named as the "psychological costs" associated to tax evasion. We build a theoretical model of tax evasion including non monetary considerations. We propose an empirical study on the determinants of the psychological costs of tax evasion, based on the theoretical taxonomy proposed by Lagares (HPE 1994). Data come from a questionnaire filled by 705 university students. The dependent variable is the percentage of students considering acceptable to evade taxes. Using a binomial logit model we find that the justification of tax evasion is statistically related with: the presence of grievance in absolute terms (those who feel that taxes are too high; waste of public funds), grievances in relative terms (the suspected level of tax evasion by others, those accepting black economy labor), the sense of duty (having had a drink in a bar without having paid for it, buying pirated CDs) and the level of solidarity (people having made donations to ONGs, disposition to help other to solve academic doubts).