Abstract While an emerging body of literature has examined the direct effects of fairness perceptions on taxpayer compliance, this study contributes to the literature by examining indirect effects (i.e., the effect of the perceived fairness of taxing one type of income on the compliance decision for reporting another type of income). The equity-control model is also used to examine the potential moderating effect that taxpayers' perceived level of control over the tax process has on their reaction to perceived inequity. To test the hypotheses, evening, part-time adult students were given a hypothetical taxpayer scenario. The results indicate that fairness perceptions of taxing a single type of income (unemployment compensation) have a significant effect on the reporting decision for an unrelated form of income (self-employment income), as well as on the perceived fairness of the total tax burden. Further, consistent with predictions from equity-control theory, the taxpayers' perceived level of control over the tax process was found to have a significant moderating effect on noncompliance for those participants who considered their tax burden inequitable. These results have important policy implications regarding strategic initiatives designed to improve taxpayer compliance.
Maroney et al. (Sun,) studied this question.