The Relationship between Culture and Tax Evasion across Countries: Cases of the USA and Germany

ABSTRACT

The purpose of this study is to compare the national culture for the Germany and the United States (US) and to analyze how the national culture affects the perception of tax evasion. This research analyzes the different types of tax evasions, the tax audit, and criminal investigation approaches in the USA and Germany. This study identifies important gaps in academic and practical understanding of tax evasion, and provides suggestions for revision of tax audit in the USA and Germany. The article provides a greater understanding of the impact of national culture on tax evasion and offers policy recommendations for the improvement of tax audit.

KEYWORDS:

• Tax evasion
• international taxation
• tax administration
• tax gap
• criminal investigation
• tax avoidance

Acknowledgments

The authors are grateful to the anonymous referees of the journal for their extremely useful suggestions to improve the quality of the article. Usual disclaimers apply. They are also grateful to the Editor-in-Chief of IJPA, Professor Ali Farazmand for his suggestions to improve the manuscript bringing it up to the level of publication.

Notes

1. How to Interpret Criminal Investigation Data: since actions on a specific investigation may cross fiscal years, the data shown in cases initiated may not always represent the same universe of cases shown in other actions within the same fiscal year. A fiscal year runs from October 1 through September 30. Sentence includes confinement to federal prison, halfway house, home detention, or some combination thereof.