Introduction

Most studies of tax evasion take an economic or public finance perspective. Not much has been written from a philosophical or ethical viewpoint. That is probably because most economists are utilitarians and most lawyers are legalists. However, there is a small body of literature that addresses tax evasion issues from a philosophical or theological perspective. The present study is intended to add to that small body of literature while forming a bridge to the public finance literature as well.

The authors developed a survey instrument that included eighteen (18) statements incorporating the three major views on the ethics of tax evasion that have emerged in the literature over the last 500 years. The survey was distributed to a group of business and engineering students and faculty in India. This paper reports on the results of that survey.

Methodology

After reviewing the literature that exists on the ethics of tax evasion, a survey was constructed and distributed to a group of graduate and undergraduate business and engineering students and faculty in order to learn their views on the ethics of tax ­evasion. This group was selected because they will be the future business and ­political leaders of India. Due to space constraints, the literature is not reviewed here. However, the relevant literature is listed in the reference section.

The survey consisted of eighteen (18) statements. Using a seven-point Likert scale, respondents were asked to place the appropriate number in the space provided to indicate the extent of their agreement or disagreement with each statement. The statements in the survey reflected the three main viewpoints on the ethics of tax evasion that have emerged over the centuries. Four hundred and sixty-eight (468) usable responses were received.

Survey Findings

The next few sections report on the study’s findings.

Demographics

Table 20.1 lists the demographics of the survey. The sample was almost evenly divided between males and females. The largest group by academic major was accounting, followed closely by other business and economics majors. There was also a fair representation of engineering majors. Slightly more than 200 participants have an unknown major because some of the surveys distributed did not ask for student major. Most of the participants were either graduate students or faculty members. The group was overwhelmingly Hindu.

Table 20.1 Demographics
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The 18 Statements

Table 20.2 lists the 18 statements that were used in the survey instrument and shows the mean scores. The first 15 statements were selected based on the arguments Crowe (1944) identified to justify tax evasion in the last 500 years of literature discussion. The last three statements were added to reflect more recent human rights issues.

Table 20.2 Summary of responses
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The average mean score was 4.88, which indicates a fair degree of support for tax evasion.

Ranking

Some arguments to justify tax evasion are stronger than others. It was thought that ranking the arguments by strength would yield some useful information.

Table 20.3 ranks the statements from strongest to weakest argument supporting tax evasion. The range of mean scores was 3.57–5.93, which indicates both that there is a fair degree of support for tax evasion in some cases and that some arguments are stronger or more persuasive than others. The difference in mean scores between the highest and lowest ranked arguments was significant at the 1% level (p  <  0.0001).

Table 20.3 Ranking
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The most persuasive argument to justify tax evasion was the case where a large portion of the money collected is wasted. Only slightly weaker was the case where a significant portion of the money winds up in the pockets of corrupt politicians or their families and friends. Other strong arguments to support tax evasion were in cases where the tax system is perceived as being unfair, where the government discriminates on the basis of religion, race, or ethnic background, where the taxpayer is a victim of an oppressive regime and where there is an inability to pay.

Other strong arguments to support evasion were in cases where the government imprisons people for their political opinions, where tax rates are too high, or where the proceeds go to support a war that is perceived as being unjust.

Some of the weakest arguments to justify tax evasion were in cases where the tax funds are spent wisely or for worthy projects, where everyone is doing it or where the funds are spent on projects that benefit the taxpayer.

Comparisons with Other Studies

A similar survey instrument was used to learn the opinions of students in several other countries. Table 20.4 shows the relative ranking for some other studies and compares those rankings to the rankings for the nine strongest arguments in the present study.

Table 20.4 Comparison of relative rankings with other studies. Nine strongest arguments to justify tax evasion
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The comparison was interesting. In the case of Thailand, another Asian country, the same nine arguments were ranked among the top 9 statements, although the ranking was different. The same was true for Argentina and Estonia. In the cases of Germany and the USA, 8 of the 9 statements in the top 9 for India were also in the top 9 for Germany and the USA.

One conclusion that can be drawn is that the strongest arguments used to justify tax evasion are similar across a wide range of countries, ethnicities, cultures, and religions. Further research is needed to determine the reasons for the differences in rankings for particular arguments.

Gender

Gender is perhaps the most frequently studied demographic variable in the social science literature. A number of studies have examined gender in conjunction with various ethical issues or behaviors. Some studies concluded that women are more ethical than men (Akaah, 1989; Beltramini et al., 1984; Beu et al., 2003; Dawson, 1997; Ferrell and Skinner, 1988; Hoffman, 1998). Other studies found that there is no significant difference between men’s and women’s views on ethical issues (Babakus et al., 2004; Browning & Zabriskie, 1983; Callan, 1992; Dubinsky & Levy, 1985; Roxas & Stoneback, 2004). A few studies have found that men are more ethical than women (Barnett & Karson 1989; Weeks et al., 1999).

Several studies on attitudes toward tax evasion have also examined gender differences. Women were found to be more opposed to tax evasion in Australia (McGee & Bose, 2009), China (McGee & Guo, 2007), Colombia (McGee, López & Yepes, 2009), Estonia (McGee, Alver & Alver, 2008), Germany (McGee, Nickerson & Fees, 2006), Guatemala (McGee & Lingle, 2008), New Zealand (Gupta & McGee, 2010), Puerto Rico (McGee & López, 2007), South Africa (McGee & Goldman, 2010), Taiwan (McGee & Andres, 2009), and Thailand (McGee, 2008). Men were found to be more opposed to tax evasion in Romania (McGee, 2006), Slovakia (McGee & Tusan, 2008), and Turkey (McGee & Benk, 2011). Other studies found that there was no significant difference between male and female opinions regarding the ethics of tax evasion. Those studies were for Argentina (McGee & Rossi, 2008), China (McGee & An, 2008), Southern China and Macau (McGee & Noronha, 2008), France (McGee & M’Zali, 2009), Hong Kong (McGee & Butt, 2008), Kazakhstan (McGee & Preobragenskaya, 2008), Macau (McGee, Noronha & Tyler, 2007), and Poland (McGee & Bernal, 2006).

One reason given for women being more ethical is because they are more likely to defer to authority. In cases where women and men had similar views on ethical issues, one reason given was because women’s views are becoming closer to men’s views as they become liberated.

Table 20.5 shows the sample size, mean scores, and standard deviations for each statement classified by gender.

Table 20.5 Statistical data – gender
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The overall means scores indicate that men (4.93) were somewhat more opposed to tax evasion than women (4.82). Table 20.6 compares the male and female scores for each statement and shows the p value and extent of significance for each statement. Women were more opposed to tax evasion in only 4 of 18 cases. Men were more opposed in 12 cases. In 2 cases the male and female mean scores were identical. Men were significantly more opposed in only one case, if significance is defined as (p  =  0.05). Thus, we may conclude that men are slightly more opposed to tax evasion in most cases but the difference is usually not significant.

Table 20.6 Comparison of male and female mean scores
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Student Status

A few other studies have examined student status in conjunction with attitudes on tax evasion. A study of Argentina (McGee & Rossi, 2008) found that students and faculty were equally opposed to tax evasion. An Australian study (McGee & Bose, 2009) found that, overall, undergraduate students were least opposed to tax evasion and faculty members were most opposed to tax evasion. An Estonian study (McGee, Alver & Alver, 2008) found that, overall, undergraduate students were least opposed to tax evasion and faculty members and practitioners were most opposed to tax evasion. A New Zealand study (Gupta & McGee, 2010) found that graduate students were more opposed to tax evasion than undergraduate students.

Table 20.7 shows the sample size, mean scores, and standard deviations for each statement classified by student status. Only the graduate student group and faculty were compared, since the sample sizes for the other categories were too small to have a meaningful analysis.

Table 20.7 Statistical data – student status
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Table 20.8 compares the graduate student and faculty scores and shows the p value and extent of significance for each statement. Overall, faculty were more opposed to tax evasion than graduate students, as indicated by the overall mean scores (graduate students  =  4.74; faculty  =  5.36). Faculty were more opposed to tax evasion in 17 of 18 cases. In 13 cases, the difference was significant, if one defines significance as (p  =  0.05). In the one case where graduate students were more opposed to tax evasion, the difference was significant at the 5% level (p  =  0.0376). Thus, we can conclude that, generally, faculty are more opposed to tax evasion than graduate students.

Table 20.8 Comparison of graduate student and faculty mean scores
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Academic Major

A few prior tax evasion studies have compared the views of various student majors. An Argentina study (McGee & Rossi, 2008) found that business and economics majors were more opposed to tax evasion in 16 of 18 cases, compared to law students. An Armenian study (McGee & Maranjyan, 2008) found that business students were more strongly opposed to tax evasion than theology students, although neither group showed strong opposition. An Australian study (McGee & Bose, 2009) found that business and economics students were least opposed to tax evasion among the majors included in the study and that seminary students were most opposed. Accounting majors were ranked between these two groups. A Chinese study (McGee & Guo, 2007) found that business and economics students were less opposed to tax evasion than law and philosophy students and that law and philosophy students were equally opposed to tax evasion. An Estonian study (McGee, Alver & Alver, 2008) found that accounting students and business and economics students were equally opposed to tax evasion.

Table 20.9 shows the sample size, mean scores, and standard deviations for each statement classified by academic major. Only accounting majors and other business/economics majors were compared, since the sample sizes for the other categories were too small to have a meaningful analysis.

Table 20.9 statistical data – academic major
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Accounting majors were more opposed to tax evasion in 10 of 18 cases. However, the mean scores were significantly different in only one case, if one defines significance as (p  =  0.05). In two other cases, the difference was significant at the 10% level. Thus, all we can say is that accounting majors were slightly more opposed to tax evasion than were the other business and economics majors.

Table 20.10 compares the accounting and other business/economics scores and shows the p value and extent of significance for each statement.

Table 20.10 Comparison of mean scores by academic major
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Religion

Comparisons were not made by religion, since the only religion with a sufficiently large sample size was the Hindu religion.

Concluding Comments

The present study is one of the few that have been done soliciting Indian opinion on the ethics of tax evasion. Thus, it makes a contribution to the literature. However, there is room for more research in the area. One possible study would be a comparison of other academic majors. Law and philosophy student opinion would be especially interesting.

The present study sampled Indian university students, who are both younger and more educated than the general population. Thus, the results found may not be applicable to the general population. A study that samples other demographic groups would therefore likely prove fruitful. Older people and professionals, such as accounting and law practitioners, would be logical extensions of the present study. Other possible demographic variables worth examining would be income level, marital status, religion, and region.