Why people pay taxes: From a conventional economic model to a model of social convention

Abstract

This paper compares 'chauvinistic' models of tax (non)compliance derived from mainstream neo-classical economics with the 'softy' approach of some psychologists, sociologists and other interested parties. A 'third way' is developed which takes preferences over conformity to social conventions into account, is more process orientated and less deterministic than traditional economic models yet maintains their characteristic deductive stance.