In the official economy, economic success is achieved within the framework of regulatory laws. Labour and capital income, consumption, etc. are taxed to provide public goods, to balance income differences in the society, and to regulate the behaviour of individuals and firms.However,money is also made in the shadows of the official economy, and some citizens do not pay taxes as prescribed by law.
This chapter starts out with a discussion of the shadow economy. In the narrowest sense, the shadow economy comprises work on the black market and the exchange of goods there. In a broader sense, housework and helping one's neighbours also count – as do illegal activities like drug dealing, smuggling and dealing in stolen goods. In general, those activities are discussed that would otherwise be included in official calculations of the gross national product, but are concealed through the circumvention of regulations and the evasion of social contributions in general, and of taxes in particular.
One particular problemanalysed by economic psychology concerns the willingness to pay taxes and fees. This can be partly described through attitudes towards taxes and tax morale. However, taxpayer behaviour can range from deliberate tax evasion to voluntary cooperation and needs to be examined more closely. Different actors can be distinguished in the field of taxation (government, tax authorities, tax accountants, taxpayers) and they interact in complex ways.Various research methods are applied in studying taxpayer behaviour and these sometimes produce inconsistent findings.
Taxpaying can be researched within different paradigms. There has been a shift from investigations of the effect of tax authorities’ enforcement on taxpayer compliance towards investigations of trust-building measures that encourage cooperation for the welfare of the community. Perspectives range from the effectiveness of audits and fines, social norms and fairness considerations in social contribution dilemmas and the ‘psychological contract’ to the interactional climate where actors mutually influence each other. Over the past few decades, the predominant view of taxpayers has shifted from an authoritarian perspective, where authorities compel citizens to pay their taxes, to a view where authorities are encouraged to provide the necessary services to promote compliance, and, more recently, to a view where authorities and citizens cooperate with one another. The slippery slope framework is presented as a theoretical concept, integrating economic and psychological approaches to compliance and cooperation.