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A Note on the Relation between Frames, Perceptions, and Taxpayer Behavior

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  • SCOTT B. JACKSON
  • RICHARD C. HATFIELD

Abstract

In this study, we incorporate taxpayers' threat /opportunity perceptions into our analysis of taxpayer behavior in order to refine and extend our understanding of the internal cognitive forces that shape taxpayer behavior. Decision†making frames (that is, the gain and loss domains from the prospect theory value function) and individual perceptions (that is, perceptions of decision alternatives as being threats or opportunities) are both likely to influence behavior, yet prior research has generally ignored the behavioral effects of individual perceptions. The results of our experiment reveal that taxpayers who are due a tax refund (owe additional taxes) prior to considering a judgemental tax deduction tend to perceive the conservative (aggressive) tax deduction to be more of an opportunity/less of a threat. In turn, we find that taxpayer frames have a direct effect on taxpayer behavior and an indirect effect on behavior through their effect on taxpayers' threat/opportunity perceptions. Perhaps the most important message of this study is that researchers can advance our understanding of the internal cognitive processes that shape taxpayer behavior by incorporating taxpayer perceptions into their research designs.

Suggested Citation

  • Scott B. Jackson & Richard C. Hatfield, 2005. "A Note on the Relation between Frames, Perceptions, and Taxpayer Behavior," Contemporary Accounting Research, John Wiley & Sons, vol. 22(1), pages 145-164, March.
  • Handle: RePEc:wly:coacre:v:22:y:2005:i:1:p:145-164
    DOI: 10.1506/L5LA-L863-CF9K-WEJ5
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    Cited by:

    1. Hunt, Nicholas C. & Iyer, Govind S., 2018. "The effect of tax position and personal norms: An analysis of taxpayer compliance decisions using paper and software," Advances in accounting, Elsevier, vol. 41(C), pages 1-6.
    2. Fochmann, Martin & Wolf, Nadja, 2019. "Framing and salience effects in tax evasion decisions – An experiment on underreporting and overdeducting," Journal of Economic Psychology, Elsevier, vol. 72(C), pages 260-277.
    3. Geoffrey Bartlett & Eric Johnson & Philip Reckers, 2014. "Accountability and Role Effects in Balanced Scorecard Performance Evaluations When Strategy Timeline Is Specified," European Accounting Review, Taylor & Francis Journals, vol. 23(1), pages 143-165, May.
    4. Blaufus, Kay & Milde, Michael & Schaefer, Marcel, 2022. "Saving at tax time: Do additional retroactive savings opportunities increase retirement savings?," arqus Discussion Papers in Quantitative Tax Research 272, arqus - Arbeitskreis Quantitative Steuerlehre.
    5. James Alm & Kay Blaufus & Martin Fochmann & Erich Kirchler & Peter N. C. Mohr & Nina E. Olson & Benno Torgler, 2020. "Tax Policy Measures to Combat the SARS-CoV-2 Pandemic and Considerations to Improve Tax Compliance: A Behavioral Perspective," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 76(4), pages 396-428.
    6. Ethan LaMothe & Donna Bobek, 2020. "Are Individuals More Willing to Lie to a Computer or a Human? Evidence from a Tax Compliance Setting," Journal of Business Ethics, Springer, vol. 167(2), pages 157-180, November.
    7. Jeffrey Cohen & Gil Manzon & Valentina Zamora, 2015. "Contextual and Individual Dimensions of Taxpayer Decision Making," Journal of Business Ethics, Springer, vol. 126(4), pages 631-647, February.
    8. Jackson, Scott B. & White, Richard A., 2008. "The effect of tax refunds on taxpayers’ willingness to pay higher tax return preparation fees," Research in Accounting Regulation, Elsevier, vol. 20(C), pages 63-88.
    9. Austin, Chelsea Rae & Bobek, Donna D. & Jackson, Scott, 2021. "Does prospect theory explain ethical decision making? Evidence from tax compliance," Accounting, Organizations and Society, Elsevier, vol. 94(C).

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