Tax compliance determinants: A proposed model for cross-country analysis

Denise Bowen O'Shaughnessy, University of Texas at El Paso


The issue of tax compliance has been identified world-wide as a significant problem. The importance of understanding tax compliance behavior is essential to government policy makers, tax enforcement agents, citizens, and businesses (Hite & McGill, 1992; Joulfaian and Rider, 1998; Internal Revenue Service, 2008; Chau and Leung, 2009). Insight into the decision making process of taxpayers is crucial to researchers in assisting governments as they struggle to meet new challenges of a growing global economy while trying to balance increasing deficits and infrastructure demands. This dissertation investigates the determinants of tax compliance behavior at an international level in an attempt to offer both researchers and policy makers a more defined understanding. The dissertation begins by identifying key tax compliance determinants in cross-country literature and organizing them into a theoretically based model. The Fischer Model (Fischer et al., 1992) categorizes the fourteen key factors of tax compliance established by Jackson and Milliron (1986) into four groups; demographics, noncompliance opportunities, attitudes and perceptions, and tax system/structure. The constructs from the Fischer Model framework are then integrated into a cognitive model allowing the examination key pathways between tax compliance determinants by going one step further with a parallel processing approach (Rodgers and Gago, 2001). The "Throughput Model" (Rodgers, 1997) depicts various stages and pathways that can influence a taxpayer's compliance decision process. The TM approach asserts that four major processing stages of perception, available information, judgment, and decision choice with their total effects will provide more meaningful relationships of the impediments or causes of decisions (Rodgers, 1997; Rodgers and Gago, 2001; Rodgers, 2006; 2010; Rodgers et al., 2013). This innovative approach to the tax compliance decision making process may provide a more complete picture of tax compliance behavior than currently available. A second generation multivariate analysis tool, Partial Least Squares (PLS) modeling methodology is used for the parallel processing analysis of the stages and pathways identified in the TM (Rodgers et al., 2013). This research offers a new direction in tax compliance research. The use of a decision making model and PLS will allow researchers to investigation beyond the traditional input out analysis into the impacts of different stages and pathways. Governments and policy makers will have a better understanding of which aspects of tax compliance behavior are weighted more. While, MNE's can assess the importance of various factors within a particular country prior to conducting business.

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Recommended Citation

O'Shaughnessy, Denise Bowen, "Tax compliance determinants: A proposed model for cross-country analysis" (2014). ETD Collection for University of Texas, El Paso. AAI3636430.