How the Social Learning Theory Explains Tax Evasion - Literature review Example

TAX EVASION For every country to carry out their activities without a lot of strain, they need to have a source of revenue to finance these activities (Shadbegian, 1999. p.222). Taxes are among the chief sources of government income. They are charged directly or indirectly to citizens or legal entities of a given country. Tax evasion is the intentional refusal of payment of tax that is illegal. Tax minimization and evasion have a lot of resemblance. One may minimize the taxes they pay, provided it’s through legal means. Tax evasion is in the category of white-collar crimes. According to Spicer, Michael, and Lee (1980, P 171), White collar crimes are said to be intentional illegal activities conducted by people and institutions to maximize their profits in legal transactions.” The government is usually the victim of tax evasion. Tanzi (1999 p. 267) found that tax evasion reduces finances available to the government thus impeding current development in the country. The offender is the errant taxpayer who is trying to maximize his, hers or its profits through wrongful means. Social learning theory can clearly explain tax evasion. According to Bandura (1978. p. 12) the social learning theory deals with the socialization, that is, it concentrates more on the development of oneself, individual learning practice and the effect on the socializing individuals by the society. This theory has its roots in psychology with psychologist Albert Bandura significantly moulding it. Criminologists and sociologists often use this theory to comprehend crime. Akers, Ronald, et al. (1997 p.640) thoroughly explains social learning as when the likelihood that individuals will take part in criminal and deviant behaviour is increased, and the likelihood of their incompliance to the custom is decreased. They differentially interact with others who commit criminal behaviour and embrace definitions auspicious to the crim. They are also quite more exposed in-person or figuratively to significant criminal or deviant models, define it as desirable or acceptable in a condition discriminative for the behaviour, and have expected in the past and expect in the present-day or yet to come condition reasonably grander incentive than retribution for the behaviour. Akers (1979. p. 638) posits differential reinforcement and modelling to be the main mechanisms by which people involve themselves in crime as the social learning theory explains. The mechanisms explaining tax evasion supports this theory. First is the beliefs mechanism where individuals can teach others beliefs that are crime friendly. For example, a given individual may spread a rumour on how the government is misusing the revenue they get from taxes. Hence the people will have a certain belief that the money they pay for the taxes are misused and hence they become reluctant in paying of taxes. The belief’s mechanism breaks down into three stages. These stages show how criminal behaviour develops and finally changes the perspective of individuals in the society. The first stage is the approval of minor crimes. These can be crimes such as taking of soft drugs, gambling and violation of rules at home. The second is approval of some crimes by these individuals where these people are very aware that crime is wrong, but they tend to justify some of their deeds during certain situations. In the third stage, some people develop a general attitude favourable to crime due to how crime looks attractive to them. It applies to people who are addicted to adrenaline, have a huge desire to thrill, those who hate working hard and a desire for a short cut to success or those who want to look tough will tend to take crime lightly. These three stages can clearly elucidate on tax evasion. In the first stage, people view it as a soft crime and do not take it seriously. In the second stage, some will justify tax evasion with the pretext that since the government is misappropriating funds, then, there is no need to pay taxes to avoid the misuse (Clotfelter 1983 p. 369). In the last stage, perpetrators of tax evasion may be lazy people who do not want to pay taxes since this will reduce their earnings thus reduce their success rate. Many believe that the success is defined by having a lot of cash in hand; hence, they try to increase their chances by refusing to pay taxes. Differential reinforcement is the second mechanism that tries to define social learning. It describes how people teach others on ways to engage in crime, which they achieve mainly through having crimes being regularly encouraged and seldom punished. Having many rewards of crime like money and pleasure with little or no punishment does not help the situation. If persons will desist from or commit an offense at any particular period (and if they will carry on or cease from doing it in the future) rest on the past, present, and expected future plunders and punishments for their activities should follow (Akers and Sellers 2004 p.87). Through this mechanism, predecessors introduce many to its ways hence helping in understanding of tax evasion offenders. Many have been good taxpayers until others negatively influence them. According to Frayne and Gary (1987 p. 387), friendships with felonious friends are the paramount indicator of felonious behaviour other than prior criminal behaviour. This crime is very attractive as few are caught, and those caught face little consequences. Tax evasion seems to ensure the enjoyment of profits. To achieve this, they have to cook books, not register a company, and pay employees with cash. Modelling is the last mechanism of social learning. Rotter (1982 p. 245) finds that the deeds people engage themselves in are not only because of their beliefs and reinforcements, but also because of the behaviour of those they surround themselves with. Therefore, the behaviours and outlooks of others form the personality for people to acquire more resources. Frequently, people model behaviours of others especially those they have a high regard for in life. Upon seeing their role models exercising tax evasion, people may also do the same. Latham and Lise (1979 p.239) stated that Social learning theory has been frequently used in studies, with the strong relationships found thriving between social learning notions and criminal activities greatly enriching its meaning. Examination of the above three mechanisms separately and in various combinations has been seen to explain deviant and criminal behaviour with very diminutive negative proof. In conclusion, social learning theory has been unequivocally used to explain tax evasion. The theory shows that this crime is because of the influence from peers. It brings about beliefs, differential reinforcement, and modelling that are the three states with either stage attempting to explain how tax evasion may have come about and is still spreading among people. Reference List Akers, R.L., and C.S. Sellers., (2004). Criminological Theories: Introduction, Evaluation, and Application (4th Ed). Los Angeles: Roxbury Publishing. Akers, Ronald L., et al. (1979) "Social learning and deviant behavior: A specific test of a general theory." American Sociological Review  Bandura, Albert. (1978) "Social learning theory of aggression." Journal of communication Clotfelter, Charles T. (1983)"Tax evasion and tax rates: An analysis of individual returns." The review of economics and statistics  Frayne, Colette A., and Gary P. Latham. (1987)"Application of social learning theory to employee self-management of attendance." Journal of applied psychology72.3 Latham, Gary P., and Lise M. Saari. (1979) "Application of social-learning theory to training supervisors through behavioral modeling." Journal of Applied Psychology Rotter, Julian B. (1982) "Social learning theory." Expectations and actions: Expectancy- value models in psychology  Shadbegian, Ronald J. (1962) "The effect of tax and expenditure limitations on the revenue structure of local government. Spicer, Michael W., and Lee A. Becker. (1980) "Fiscal inequity and tax evasion: An experimental approach." National Tax Journal  Tanzi, Vito. (1992)"12 Structural factors and tax revenue in developing countries: a decade of evidence." Open Economies: Structural Adjustment and Agriculture Read More