Smart if Honest: Evaluation of Legal and Illegal Tax Behaviors of Employees and Entrepreneurs

Aim: The drive to minimize the amount of taxes paid is interpreted as concern for self-interest, which is one of the fundamental motives for action and social perception. Utilizing the opportunity to evade taxes, however, may involve distorting the moral evaluation of such behavior to maintain a positive self-image. The aim of the presented study was to analyze social evaluations of legal versus illegal means of reducing tax payments, considering the perspective of the person making the evaluation. Due to the differences between the legal and illegal methods for reducing the amount of taxes paid available to employees and entrepreneurs, the study included scenarios referring to both of these groups of taxpayers. Method: The study was conducted using the CAWI methodology on a sample of Polish taxpayers (N = 223). A custom questionnaire was used, containing brief descriptions of four tax scenarios differing in the legality of the action taken and the characteristics of the person undertaking it. Respondents were asked to evaluate the presented behaviors on a semantic differential scale: smart – not smart. Results: Respondents rated legal tax reduction as smarter than illegal tax evasion. However, in the case of both legal reduction of taxes and tax evasion (illegally avoiding paying taxes), the evaluation depended on whether the described taxpayer was an employee or an entrepreneur. In the case of evaluating legal tax reduction, it also depended on the respondent's form of employment. A more positive assessment of the actions of one's own professional group only applied to entrepreneurs avoiding taxes. Conclusion: Legal and illegal methods of reducing taxes are socially distinguished, with more positive evaluations for behaviors that comply with the law, regardless of whether the individual reducing taxes was depicted as an employee or an entrepreneur. The study results do not support the hypothesis of egocentric distortion in the assessments of the analyzed tax behaviors of employees and entrepreneurs.