Using Salience and Influence to Narrow the Tax Gap

48 Pages Posted: 3 Jun 2008 Last revised: 14 Nov 2012

Susan C. Morse

University of Texas at Austin - School of Law

Date Written: May 18, 2009

Abstract

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.

Keywords: tax gap, salience, influence, self-employed taxpayers, small business taxpayers

JEL Classification: H26

Suggested Citation

Morse, Susan C., Using Salience and Influence to Narrow the Tax Gap (May 18, 2009). Loyola University Chicago Law Journal, Vol. 40, p. 483, 2009. Available at SSRN: https://ssrn.com/abstract=1139891

Susan C. Morse (Contact Author)

University of Texas at Austin - School of Law ( email )

727 East Dean Keeton Street
Austin, TX 78705
United States

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