Tax Chat! The Economic Psychology of Tax Behavior

In this month's Tax Chat! we talk with Professor Erich Kirchler of the Faculty of Psychology at the University of Vienna. Erich is the author of Economic Psychology: An Introduction (with Erik Hoelzl) and Economic Psychology of Tax Behaviour. He developed the Slippery Slope Framework, as distinct from the traditional approach to tax compliance, which assumes taxpayers are generally reluctant to pay tax and base their compliance decisions on the probability of being audited and the subsequent penalty for noncompliance.
The Slippery Slope Framework (SSF), on the other hand, draws on economic and psychological insights to posit that tax compliance is an interaction between taxpayers and the tax authority – one that involves a dynamic relationship between the power and trustworthiness of the tax authority. That dynamic can be further understood by exploring the effects of coercive and legitimate power, and reason-based and implicit trust. Emotions experienced by taxpayers in the course of their interaction with the tax authority also influence compliance behavior
In this Tax Chat! we discuss tax psychology methodology, the Slippery Slope Framework, the impact of audits and penalties on tax compliance, taxes and emotions, and challenges for tax administration in the wake of the pandemic.