Monday, July 15, 2013

Taxes and Morality (7/15/13)

I just revisited a Pew Research study titled A Barometer of Modern Morals:
Sex, Drugs, and the 1040 (3/28/06), here.  Here are the results of a poll of 745 people, with the percentages of people classifying each behavior as morally wrong:
· 85%  Married People Having an Affair
· 79%  Not Reporting All Income on Taxes
· 61%  Drinking Alcohol Excessively
· 52%  Having an Abortion
· 50%  Smoking Marijuana
· 50%  Homosexual Behavior
· 43%  Lying to Spare Someone's Feelings
· 35%  Sex Between Unmarried Adults
· 35%  Gambling
· 32%  Overeating

Some excerpts on tax from the discussion of the research:
Cheating on your taxes is almost as bad as cheating on your spouse. 
* * * * 
The survey did not measure intensity of feelings. It’s possible, therefore, that the difference between the 79% who say it’s morally wrong to cheat on one’s taxes and the 88% who say the same about cheating on one’s spouse is greater (or smaller) than those numbers indicate. Judgments about right-and-wrong are by nature profound, and – in real life – often nuanced and situational. By contrast, this survey questionnaire is a blunt instrument. 
* * * * 
About that 1040 
As April 15 approaches and tens of millions of Americans prepare their tax returns, they may be interested to know that eight-in-ten of their fellow citizens (79%) consider not reporting all income on one’s taxes to be morally wrong, while just 5% consider it morally acceptable and 14% say it’s not a moral issue. 
Moral disapproval is one thing, behavior another. Earlier this year the IRS reported that in 2001 (the last year for which it had conducted such research) there was a gross “tax gap” of $345 billion, resulting from an overall non-compliance rate of about 16 percent. Of that gap, the biggest missing slice, some $197 billion, was from underreporting of income on individual income tax returns; most of that missing sum, in turn, resulted from underreporting of business income on those individual returns, the IRS found.
About a Different Kind of Cheating 
The only behavior on the Pew list that draws more moral condemnation than cheating on one’s taxes is cheating on a spouse. Some 88% say it is morally wrong for married people to have an affair, while 3% say it is morally acceptable and 7% say it is not a moral issue. 
* * * * 
- Groups with a majority saying that no more than two of these behaviors are morally wrong include college graduates, people with family incomes of at least $75,000 a year, and people who seldom or never attend religious services. For all those groups, adultery and income tax cheating are the only two behaviors that a majority judge to be morally wrong. 
- There is a partisan divide in how people judge these behaviors. A majority of Republicans say seven of the ten behaviors are morally wrong; while a majority of Democrats and independents say just three of the behaviors (adultery, underreporting taxable income; drinking excessively) are morally wrong. Independents are the least inclined of the three partisan groups to view the behaviors as morally wrong and most prone to see them as “not a moral issue.”
And, while on the subject of morality, I am reminded of the recent book by Jonathan Haidt, The Righteous Mind (Amazon here and NYT book review here), where he starts the book with some questions that may or may not involve morality to some and not others.  Here is an excerpt from the opening incorporating the results of some earlier research:
Where Does Morality Come From?  
I’m going to tell you a brief story. Pause after you read it and decide whether the people in the story did anything morally wrong.  
A family’s dog was killed by a car in front of their house. They had heard that dog meat was delicious, so they cut up the dog’s body and cooked it and ate it for dinner. Nobody saw them do this.  
If you are like most of the well-educated people in my studies, you felt an initial flash of disgust, but you hesitated before saying the family had done anything morally wrong. After all, the dog was dead already, so they didn’t hurt it, right? And it was their dog, so they had a right to do what they wanted with the carcass, no? If I pushed you to make a judgment, odds are you’d give me a nuanced answer, something like “Well, I think it’s disgusting, and I think they should have just buried the dog, but I wouldn’t say it was morally wrong.”  
OK, here’s a more challenging story: 
 A man goes to the supermarket once a week and buys a chicken. But before cooking the chicken, he has sexual intercourse with it. Then he cooks it and eats it.  
Once again, no harm, nobody else knows, and, like the dog-eating family, it involves a kind of recycling that is— as some of my research subjects pointed out— an efficient use of natural resources. But now the disgust is so much stronger, and the action just seems so  …   degrading. Does that make it wrong? If you’re an educated and politically liberal Westerner, you’ll probably give another nuanced answer, one that acknowledges the man’s right to do what he wants, as long as he doesn’t hurt anyone.
But if you are not a liberal or libertarian Westerner, you probably think it’s wrong— morally wrong— for someone to have sex with a chicken carcass and then eat it. For you, as for most people on the planet, morality is broad. Some actions are wrong even though they don’t hurt anyone. Understanding the simple fact that morality differs around the world, and even within societies, is the first step toward understanding your righteous mind. The next step is to understand where these many moralities came from in the first place.
All of which led me to ask what is morality in the first place.  The following is from the Stanford Encylopedia of Philosophy, here.
The term “morality” can be used either
1. descriptively to refer to some codes of conduct put forward by a society or,
a. some other group, such as a religion, or
b. accepted by an individual for her own behavior or
2. normatively to refer to a code of conduct that, given specified conditions, would be put forward by all rational persons.
And it goes on from there.

The type of morality Haidt addresses is individual morality that does not, seemingly, address the community, whether it is a community of two or a nation or world, where others may be adversely affected by the behavior.  But, in the case of adultery and underpayment of taxes, other people are affected by the conduct, so the community morality must be the governing morality.

One of the points of the Pew Research study is that survey results may or may not be consistent with actual behavior.


  1. Jack, the situation with the chicken is even more disgusting than the OVDI process!

    I had a question about the methodology of the survey, and read that "Survey respondents were read a list of ten behaviors and asked." Whether face to face or on the phone, people would be reluctant to admit that they don't disapprove of certain things.

    I would also suggest that people may disapprove of certain actions but do them and somehow try to justify them to themselves in all sorts of ways.

  2. Guest, I think you are right that these surveys have to be discounted depending upon the behavior and attitudes inquired about. I would suspect that the actual incidence of not reporting all income (or claiming too much deductions) is higher than 15%. The difference would be the persons in the data set who know they are morally culpable in doing that. The base 15% do not think they are morally culpable. I suspect that the ones who think it morally wrong and do it anyway are a significant percentage. And, to further complicate, because they think it is morally wrong, they may have some internal justification mechanism that permit them to excuse their conduct from the morally wrong category.

    Jack Townsend

  3. Spaghestti RobotJuly 26, 2014 at 6:10 PM

    This could be valuable information for estimating the general mindset of the jury in offshore cases. "Not Reporting All Income on Taxes" is presented as a qualifier rather than a quantifier. Big-time hustlers not getting the easy treatment in court cases is not a surprise (looking at the published reports), but I'm curious on the stats for small offenders. Has a minnow ever gone to court? It seems unlikely, since the court costs are likely to be higher than potential fines.


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