Psychology of unwillingness to pay taxes and taxpayer behavior

Psychology of unwillingness to pay taxes and taxpayer behavior

The psychology of reluctance to pay taxes is deeply rooted in postwar Japanese society. For example, people living in large cities such as Tokyo and Osaka tended to be dissatisfied with paying income and inhabitant taxes. This was also true for large corporations, which were also active in taking advantage of tax incentives and sometimes legal tax-saving measures in order to minimize their tax burden.

In fact, many taxpayers have the mentality that they are willing to lose ¥20,000 in order to reduce their tax bill by ¥10,000. In Tokyo's Minato Ward, there are many wealthy people, and they have to pay higher income taxes because of their higher incomes. However, these people are desperate for tax-saving measures to reduce the burden of property and automobile taxes on their luxury homes and private cars.

### Tax Savings and Corporate Behavior
Corporations are similarly eager to avoid tax burdens. For example, large corporations try to gain tax benefits by investing heavily in R&D. In other cases, companies seek to reduce local taxes by relocating their headquarters from Tokyo to regional cities.

On the other hand, in areas with many small and medium-sized businesses, such as Higashi-Osaka City in Osaka Prefecture, businesses often postpone paying taxes because the tax payments directly affect their operations. In addition, there are cases where businesses go as far as to illegally reduce taxes by revising their books and padding their expenses.

### Taxpayers' Psychology of Not Wanting to Pay and the Lessons of Policy
This psychology of taxpayers is similar to the "if necessary, avoid regulations" behavior that led to the shortage of goods during the war. For example, it is still fresh in our minds that some taxpayers falsified the fuel efficiency of their cars in order to reduce gasoline taxes. These cases illustrate the importance of trust between government and taxpayers.

The government needs to show more visible enhancement of public services in order to reduce the impression that taxpayers are "taken" for granted. For example, by giving back to taxpayers in the form of childcare support and reduced medical costs, the resistance to paying taxes can be reduced.

### Lessons Learned
This psychology of taxpayers toward taxes has important implications for future tax reform. To prevent excessive tax burdens from discouraging economic activity, governments should establish a fair and transparent tax system. It is also essential to simplify the tax system and strengthen tax audits to prevent companies and individuals from resorting to tax-efficient practices. Creating a social system in which taxpayers are willing to pay taxes is essential for the healthy growth of the economy.