An expanded model of taxpayer compliance: Empirical evidence from the United States and Hong Kong

Abstract

There are a number of differences in the tax system structures of the U.S. and Hong Kong. In addition, the literature suggests there are significant differences between U.S. and Hong Kong (Chinese) cultures. This study explores whether taxpayer compliance is influenced by these differences. Fischer et al.'s (1992) expanded model of taxpayer compliance is used as the underlying theoretical framework. The model is empirically tested using a structural equations approach with a convenience sample of Hong Kong and U.S. taxpayers. Results indicate education has a direct, negative effect on compliance in both groups. This effect is moderated by an indirect, positive link between education, moral development, and compliance. The significant differences noted are that U.S. (Hong Kong) taxpayers used higher (lower) stages of moral reasoning, had more (less) favorable attitudes toward the tax system, and were more (less) compliant. These results suggest that efforts to increase taxpayer compliance need to be tailored to the structure of the tax system and the predominant culture of the taxpayers. © 2000 Cognitive Science Society, Inc.