Tax Morale and Tax Compliance from the Firm's Perspective

17 Pages Posted: 9 Apr 2012

See all articles by James Alm

James Alm

Tulane University

Chandler B McCellan

AHRQ - Center for Financing, Access & Cost Trends

Date Written: February 2012


Much recent research has investigated whether values, social norms, and attitudes differ across countries and whether these differences have measurable effects on economic behavior. One area in which such studies are particularly relevant is tax compliance, and a factor that has been suggested as a factor in compliance behavior is “tax morale”, or the intrinsic motivation to pay taxes. However, all of this work on tax morale has focused on individuals, not on firms. In this paper, we use information from the Business Environment and Enterprise Performance Survey and also from the World Enterprise Survey for a wide range of countries over several years of data to examine a firm's tax morale and the subsequent impact on firm tax compliance. We use these data first to examine a firm's perception of taxes as an obstacle to doing business. Importantly, once we control for the various factors that affect this perception, what is left is a measure that we believe is a measure of the firm's tax morale, as a driver of the firm's view of the appropriateness of cheating on taxes. With this measure of tax morale, we are then able to examine in a second stage estimation how our estimated firm tax morale affects the compliance decisions of the firm. Ultimately, our results allow us to identify factors that allow the government to improve its efforts to increase firm tax compliance.

Suggested Citation

Alm, James and McClellan, Chandler B, Tax Morale and Tax Compliance from the Firm's Perspective (February 2012). Kyklos, Vol. 65, Issue 1, pp. 1-17, 2012, Available at SSRN: or

James Alm (Contact Author)

Tulane University ( email )

United States
5048628344 (Phone)

Chandler B McClellan

AHRQ - Center for Financing, Access & Cost Trends ( email )

540 Gaither Road
Rockville, MD 20850
United States

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