Using Salience and Influence to Narrow the Tax Gap
Susan C. Morse
University of California Hastings College of the Law
May 18, 2009
Loyola University Chicago Law Journal, Vol. 40, p. 483, 2009
Most self-employed and small business taxpayers cheat on their taxes. In fact, in the aggregate, they fail to pay about half the tax they owe to the government, and this unpaid tax amounts to about $150 billion annually. This amount is about half the "tax gap," or the amount of tax due that the federal government does not collect.
This paper argues that more salient government communications and greater attention to principles of influence would improve existing and proposed policies to encourage self-employed and small business taxpayers to pay their taxes. Reversing the widespread tax evasion among self-employed and small business taxpayers requires changing the existing social norm of noncompliance, which in turn demands a better connection between the government's message and the experience of taxpayers. Policymakers should recraft their anti-tax-gap messages so that they grab the attention of the target audience and take advantage of established influence tools to leverage predictable taxpayer heuristics such as availability bias and following the compliance behavior of similar peers.
Number of Pages in PDF File: 48
Keywords: tax gap, salience, influence, self-employed taxpayers, small business taxpayers
JEL Classification: H26Accepted Paper Series
Date posted: June 3, 2008 ; Last revised: November 14, 2012
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