MORAL COMMITMENT TO TAX COMPLIANCE AS MEASURED BY THE DEVELOPMENT OF MORAL REASONING AND ATTITUDES TOWARDS THE FAIRNESS OF THE TAX LAWS

Scope and method of study. A survey instrument was completed by 101 undergraduate and graduate students with at least one year of full-time work experience. Responses to a hypothetical evasion scenario served as a measure of compliance behavior that was used as the dependent variable. The independent variables were the development of moral reasoning, attitudes towards the fairness of tax laws, and mode of evasion (under-reporting income and overstating deductions). Rest's Defining Issues Test provided a measure of the development of moral reasoning while attitudes towards the fairness of the tax laws were measured using an attitude scale constructed in the preliminary phase of this study. The data were analyzed using regression analysis.; Findings and conclusions. Research results showed a significant positive relationship between attitudes towards the fairness of the tax laws and the tax compliance decision. Subjects with positive attitudes towards the fairness of the tax laws indicated a greater likelihood of compliance. No significant relationship was found between development of moral reasoning and the tax compliance decision. A marginally significant three-way interaction indicated that when mode of evasion was underreporting income and the development of moral reasoning was low, attitudes towards the fairness of the tax laws was not significantly related to the tax compliance decision but when the development of moral reasoning was high, a significant relationship existed between attitudes towards the fairness of the tax laws and the tax compliance decision.