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Introduction

The authors distributed a survey instrument to university students in Colombia, Ecuador, Puerto Rico, the Dominican Republic and the United States to determine their views on the ethics of tax evasion. Participants were asked to indicate the extent of their agreement or disagreement with each statement that has been used to justify tax evasion, using a 7-point Likert scale. Arguments were then ranked from strongest to weakest. Several comparisons were made to determine if the attitude toward tax evasion differed by country, culture or gender.

Although tax evasion has been discussed extensively in the economics and public finance literature, not much has been said about it from the perspective of ethics. There are some exceptions. Martin Crowe (1944), a Catholic priest, conducted an extensive review of 500 years worth of religious and philosophical literature on the ethics of tax evasion, some of which was in the Latin language. More recently, McGee (1998a) published an edited book on the subject. Torgler (2003) published a doctoral dissertation on tax morale, a portion of which investigated ethical aspects of tax evasion.

Several studies have been done from various religious perspectives, including Christianity (Gronbacher 1998; Pennock 1998), Judaism (Cohn 1998; McGee and Cohn 2006; Tamari 1998), Islam (McGee 1998b; Murtuza and Ghazanfar 1998), Baha'i (DeMoville 1998) and Mormon (McGee and Smith 2006; Smith Kimball 1998). If one were to summarize these studies in a single sentence, it would be that Jews, Baha'is and Mormons are strongly opposed to tax evasion, whereas Christians and Muslims are more flexible on the topic.

Some theoretical country studies have also been done. Ballas and Tsoukas (1998) discuss tax evasion and government corruption in Greece. Morales (1998) reports on the ethics of tax evasion from a Mexican perspective and concludes that the duty to one's family at times supersedes one's duty to the state. Preobragenskaya and McGee (2004) and Vaguine (1998) examine tax evasion in Russia. Smatrakalev (1998) discusses tax evasion in Bulgaria.

Some empirical studies and surveys have been conducted to determine the views on tax evasion in several countries. McGee (1999) conducted a survey to determine why tax evasion is so prevalent in Armenia. A more recent study looked at tax evasion in Armenia in more depth (McGee and Maranjyan 2006a). Country studies have also been conducted for Argentina (McGee and Rossi 2006), Bosnia (McGee et al. 2006), China (McGee and An 2006; McGee and Guo 2006), Germany (McGee et al. 2006), Guatemala (McGee and Lingle 2005), Hong Kong (McGee and Ho 2006), Macau (McGee et al. 2006), Poland (McGee and Bernal 2006), Romania (McGee 2006a) and Slovakia (McGee and Tusan 2006). If one were to summarize these studies in a single sentence, it would be that most people find tax evasion to be ethical in some situations, although some arguments to justify tax evasion are stronger than others. These studies generally found that there are three basic positions on the ethics of tax evasion—it is never ethical, sometimes ethical or always ethical, although support for the always ethical position was the weakest of the three. These three positions are discussed in depth by McGee (2006b).

The present study surveyed the opinions of university students in Colombia, Ecuador, Puerto Rico, the Dominican Republic and the United States to determine their views on the ethics of tax evasion. The survey instrument consisted of 18 statements that included the 15 main arguments that have been used to justify tax evasion in the past 500 years (Crowe 1944) plus three more recent arguments. Participants were asked to indicate the extent of their agreement or disagreement with each statement by placing a number from 1 to 7 in the space provided. The results were then tallied and the arguments were ranked from strongest to weakest. Country and gender comparisons were also made to determine whether responses varied by country or gender. The responses of accounting and business students were also compared to determine if there were any differences by major. The findings indicate that people in the Dominican Republic are less opposed to tax evasion than are the populations of the other four countries and that females are sometimes more opposed to tax evasion than are males. Surprisingly, accounting students are less opposed to tax evasion than are business students.

Findings

The total sample size was 1195, which consisted of 436 males, 710 females and 49 unknown. The two largest groups surveyed were accounting students and business/economics students. The U.S. sample included some ethnic diversity. Table 1 shows the demographic information. Table 2 shows the mean scores for each of the 18 statements for all five countries. Table 3 ranks the arguments supporting tax evasion, from strongest to weakest. The rankings are based on a five-country average. The strongest argument to support tax evasion is in cases where a large portion of the money collected is wasted. In second place is the case where a significant portion of the money winds up in the pockets of corrupt politicians or their families and friends. The third strongest argument is in cases where the system is perceived as being unfair. The ability to pay argument came in fourth. This viewpoint has a long and strong history in the Catholic theological and philosophical literature. Various human rights arguments came in fifth and sixth place. The unjust war argument, which has been the basis for war tax resistors, was tied for sixth place.

Table 1 Sample Description
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Table 2 Summary of Responses (1 = strongly agree; 7 = strongly disagree)
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Table 3 Ranking of Arguments Favoring Tax Evasion—Strongest to Weakest (1 = strongly agree; 7 = strongly disagree)
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The weakest arguments were the ones that took the position that evasion is justified even if the money is spent wisely or on projects that benefit the taxpayer. There is also a strong aversion to tax evasion where the people who pay taxes will have to pay more because the evaders pay less. Chart 1 shows the range of scores. As can be seen, although some arguments are stronger, none of the arguments produced scores that were in the bottom range.

Chart 1 Statements Ranked from Strongest to Weakest Arguments Supporting Tax Evasion

Table 4 shows the mean differences by country for each of the 18 statements. Mann-Whitney U tests were done to determine the significance of the differences. Positive numbers mean that the country in the column heading has a greater mean than the country in the row heading. The minus sign means the opposite. P values are enclosed in parenthesis. Asterisks refer to the significance level as follows: * Significant at the 1% level, ** Significant at the 5% level, *** Significant at the 10% level. Table 5 summarizes the findings for each of the 18 statements for all five countries.

Table 4 Mean Differences by Country
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Table 5 Summary of Findings
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Gender

Many studies have been conducted over the years that compare ethical attitudes of men and women. Some studies found that women are more ethical than men (Akaah 1989; Boyd 1981; Hoffman 1998) while other studies found that there is not a significant difference between male and female ethical attitudes (Browning and Zabriskie 1983; Harris 1990; Nyaw and Ng 1994). Some studies found that men are more ethical than women (Barnett and Karson 1987; Weeks et al. 1999).

Several studies of tax evasion have also compared male and female views. Men were found to be more opposed to tax evasion in studies of Romania (McGee 2006a), Slovakia (McGee and Tusan 2006) and Sweden (Vogel 1974). Women were more opposed to tax evasion in studies of China (McGee and Guo 2006), Guatemala (McGee and Lingle 2005), Mormons (McGee and Smith 2006) and Orthodox Jews (McGee and Cohn 2006). A third group of studies found no significant difference between male and female views. These studies were of Argentina (McGee and Rossi 2006), China (McGee and Noronha 2006), Hong Kong (McGee and Ho 2006), Poland (McGee and Bernal 2006) and Thailand (McGee 2006c).

The present study tests for gender differences as well. The results are presented below in Table 6. Females were more firmly opposed to tax evasion for 17 of 18 statements. Even in the one case where the male scores were higher, they were higher by only 0.01. But the differences were significant for only 5 of the 18 statements. The differences were significant for all three of the human rights arguments—Jews in Germany, discrimination and imprisonment for political ideas – and also for the argument that evasion is justified if the money is spent on projects that do not benefit the taxpayer and in cases where everyone is doing it. The most significant difference between male and female scores was for the argument that evasion was justifiable in cases where people are imprisoned for their political ideas.

Table 6 Comparison of Mean Scores by Gender
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One possible explanation for the stronger opposition to tax evasion is because females are taught from an early age to obey authority. That was the reason given to explain why women had higher scores than men in a study of Orthodox Jews (McGee and Cohn 2006). Perhaps it is a reason that is true generally. But if so, it does not explain why some other studies found no significant differences between male and female scores.

A study of gender differences in ten Latin American countries found that men and women tend to think the same but they sometimes act differently (López-Paláu 2006). If that is the case, perhaps their response to a question that begins “Would you evade taxes if….?” might yield different results. Thus, there is room for further research on the issue of male-female differences in the area of the ethics of tax evasion.

Some scores were significantly different by country as well.

  • Colombia S12, 13, 15, 16, 17 and 18 (6 statements)

  • Ecuador none (0 statements)

  • Puerto Rico S1, 2 and 7 (3 statements)

  • Dominican Republic S14 (1 statement)

  • USA S1, 6, 8, 11, 12, 14 and 18 (7 statements)

In general, results suggest that males and females are more similar than different in their ethical perceptions or opinions. The results of this study show significant differences in four countries and in the total sample in some instances, but show no differences in the Ecuador sample. The cases that show significant differences by gender vary among countries, suggesting that the national environment affects gender roles and values. The identification of the factors that lead to gender differences in specific situations and contexts is still needed.

Study Area

As can be seen from Table 7, business student scores were higher than accounting student scores for 17 of 18 statements, indicating that business students were more opposed to tax evasion. In 14 cases the differences were significant. This result is surprising. It was expected that accounting students would be more opposed to tax evasion, since they are trained to know the rules and to follow them. Also, a study of accounting practitioners found that accountants were more strongly opposed to tax evasion than were any other groups (McGee and Maranjyan 2006b).This finding might indicate that accountants in Latin America have a different view toward tax evasion than do accountants in the USA. Chart 3 shows significant differences by study area.

Table 7 Comparison of Mean Scores by Study Area
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Chart 2 Significant Differences by Gender

Chart 3 Significant Differences by Study Area

The most significant difference, both in strength and significance, is the statement that tax evasion is ethical if tax rates are too high. Scores were nearly identical for the statement that tax evasion is ethical if the government imprisons people for their political opinions. Tax evasion was more justifiable in cases where tax funds were used wrongfully or wasted. Statements 15 and 2 are the weakest for accounting students whereas statements 12 and 10 were the weakest for the business students. Table 8 shows the relative rankings for the two groups.

Table 8 Ranked Means
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USA Versus Latin American Scores

Since data were available for the USA as well as the four Latin American countries, it was thought that a comparison of scores might be useful. Table 9 shows those comparisons.

As can be seen from Table 9, the two US groups are more strongly opposed to tax evasion than are the Latin American groups. But what is surprising is that the US Hispanics are even more opposed to tax evasion than is the US group as a whole (in 15 of 18 cases), which includes non-Hispanic whites. One might think that the US Hispanic group scores would be closer to the Latin American scores, or at least would be somewhere between the US total scores and the Latin American scores. But such was not the case.

Table 9 Comparison of USA and Latin American Scores
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Table 10 Mean Scores by Ethnic Group
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One possible explanation for the higher US Hispanic scores is that US Hispanics support the government and the legal system more so than do non-Hispanic whites. If they have assimilated the cultural values of their adopted country, it is possible that they have become more American than Americans, more conservative than the general population.

This finding is somewhat different than the study of accounting practitioners (McGee and Maranjyan 2006a). In that study, non-Hispanic white accountants were the most firmly opposed to tax evasion of any of the more than 40 groups compared and, although the scores for Hispanic accountants were lower than the scores for the non-Hispanic white accountants, they were higher than the scores for practically any other group, which indicates that any category of accountant is more opposed to tax evasion than are Nonaccountants.

The scores of the Latin American and USA samples were significantly different for ten statements (1, 3, 4, 6, 7, 11, 13, 14, 17 and 18). The scores for the Latin American and USA–Hispanic samples were significantly different for 8 statements (1, 3, 4, 6, 7, 11, 13 and 14). Statements 3 and 4 had lower US-Hispanic scores than US-Total scores, but both of those scores were higher than the Latin American scores. Latin American scores were higher than scores in the other two categories only for statements 17 and 18, indicating that the Latin American sample was not as sensitive to human rights abuses as were the other two samples.

The strongest argument for the Latin Americans was statement 4 (wasted money—utilitarian rationale), whereas for the USA-Total it was statement 18 (rights—a deontological argument) and for USA Hispanics it was statement 3 (justice rationale). In the Latin American sample the weakest argument was statement 2 (low rates—an economic consideration). The USA-Total sample found statement 12 to be the weakest argument (consequences—teleological rationale—egoist) and for USA Hispanics the weakest argument was statement 5 (prudent use of money—utilitarian rationale). Table 8 shows the means for the three groups for each statement.

Concluding Comments

The study showed that, although some arguments to justify tax evasion are stronger than others, none of the arguments that have been made historically to justify tax evasion are very persuasive, judging from the relatively high scores on a scale of 1–7. A ranking of the arguments revealed that the strongest arguments to justify tax evasion involve situations where the government is engaged in human rights abuses, where tax funds are wasted, where there is corruption within the system or where the tax system is perceived as being unfair. The weakest arguments to justify tax evasion are in cases where there is a perception that people are getting something for their money, where their evasion would cause their fellow citizens to pay more or where everyone else is doing it.

Scores for the Dominican Republic were substantially and consistently lower than for those for the other countries, indicating that tax evasion is less of a moral problem for the average Dominican than for the other four groups sampled. It could be because Dominicans have less respect for their government. If there is an inverse relationship between the extent of corruption in a country and the amount of respect for the government, then one might conclude that the government of the Dominican Republic is more corrupt than the government of the other countries in the sample. A look at the Corruption Perceptions Index (Transparency International 2005) reveals the following:

From Table 11 it appears that corruption alone cannot explain why the scores for the Dominican Republic are substantially lower on the tax evasion surveys, since Ecuador is more corrupt than the Dominican Republic. Also, the scores for Colombia are often not significantly different from the scores of the USA, and are at times even higher, even though Colombia is considered to be more corrupt than either the United States or Puerto Rico. But corruption is seldom the sole explanation for anything, so it cannot be expected to be to sole reason for differences in the perception of tax evasion.

Table 11 Corruption Perceptions Index Scores
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The present study also found that females tend to be more opposed to tax evasion than are males, at least in some cases. This finding confirms the findings in some other studies but runs contra to the findings of other studies. Business majors were more strongly opposed to tax evasion than were accounting majors, which was surprising. The Latin American samples were less opposed to tax evasion than were the USA groups but, surprisingly, the USA-Hispanic group was more opposed to tax evasion than was the USA sample population as a whole.