The Dynamics of Tax Compliance

The present article aims to analyse the relationships between a tax subject, a tax and the state that established it, from both an economic and a sociological point of view, by going beyond accounting, to understand the reasons for the various types of tax compliance and noncompliance. It contains an evaluation of the tax parameters the government has at its disposal and a discussion about the extent to which it can and should use them without violating natural law. It tries to subdue the scrupulously uncompromising conviction as to which side of tax evasion lies the injustice and takes into account information asymmetry, irrationality, anarchy, tax resistance and discontent in general with the social contract. It also argues regarding the paradoxes of concepts like taxes on negative externalities or choosing between proportional, progressive, regressive or lump- sum taxes, while considering productivity stimuli and the decreasing marginal utility of wealth. The exploration and examination of different lines of thought regarding taxation results in a personal approach to the ideologies on which tax systems that resonate with the material and cultural needs of a society should be based. After evaluating various options, this paper suggests implementing a single tax on the unimproved value of land, as suggested by Henry George, as leverage in dealing with tax noncompliance and with the many inconsistencies and inadequacies of present tax schemes.