Taxpayer Behavior: Types of Taxpayers Created Through Tax Sanctions And Incentives

Abstract

As with all economic activities of individuals, tax compliance or incompliance is also built with social, cultural and psychological factors. From the complexity of the tax system to the tax penalties, from social and demographic factors to moral and social factors, many dynamics take part in this process. Taking into account that the tax policies adopted may always have unintended consequences, the considerations as to what sort of impacts that tax or other factors might have on the tax world carries importance. On the other hand, the regulation of social relations often takes place under uncertainty, as an agent, individuals can react differently to the uncertainty created by formal rules. As a formal rule, tax sanctions or facilities create different effects on taxpayer behavior and create different types of taxpayers within the system. The basic elements underlying the voluntary compliance with tax are the confidence of the taxpayer to and the perceived power of the tax administration. In this framework, efforts paid on how the determinants of taxpayers’ tax payment or non-payment tendencies affect tax compliance process and classification of taxpayers types arising from the process.