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Wednesday, June 24, 1987/Kansan Summer Weekly
Tax fraud common, KU prof says
By STORMY WYLIE
staff writer
An old cliche tells us that two things are inevitable — death and taxes.
Peggy Hite, assistant professor of business, recently received a $25,000 grant to continue her research on why people cheat on their taxes.
However, a significant number of people in the United States try to escape one inevitability by cheating on their tax returns, a KU assistant professor of business said last week.
The professor, Peggy Hite, has been studying tax compliance for a couple of years at the University of Kansas and before that, at the University of Colorado in Boulder. She recently received a $25,000 grant to continue her research.
"About 30 percent of adults surveyed have admitted to cheating at one time or another, so we assume there are more." Hite said. "The purpose of this research is to identify the major motivations of why they cheat and to find out if the tax system is too complex."
According to Internal Revenue Service statistics, certain groups of people tend to cheat more than others, she said. These groups include young people, men, college graduates, middle-income earners, self-employed people and those who live in the western third of the United States.
"I want to stress that these correlations are not perfect," she said.
"These groups just tend to cheat more than others.
"For instance, the young are more likely to take the risk, and the college-educated cheat more because of the knowledge of how the system works."
Two years ago, Hite experimented with one of her accounting classes at the University of Colorado to see how many students thought cheating was morally wrong.
Hite told her students to grade their own quizzes and that she would check only two percent of the graded quizzes — the same percentage of tax returns audited by the government.
She told them that those who cheated would be penalized, but not expelled, and those who didn't cheat would be rewarded.
Actually, she graded all the tests to see how many had cheated.
Hite said about 70 percent of the class cheated. However, when asked, only about half of the cheaters confessed. Those who hadn't cheated told her they thought cheating was morally wrong.
"This is about what we've found nationally," Hite said. "And once people have cheated, it mushrooms, and they continue to do it."
Even Hite admitted to cheating on her own tax returns.
"But that was before I started doing this research," she said.
Hite compiles her research by sending out questionnaires at random and by conducting personal interviews.
In both types of surveys, the respondents remain anonymous.
Among other things, the survey asks whether respondents have ever cheated on their taxes. It also asks for their opinions on whether income tax laws are fair or too complex, whether the penalties for not complying are severe and whether they pay more than other taxpayers.
She recently conducted a survey of about 900 Kansas residents, but the results haven't been compiled yet, she said. A problem with the mail survey is that response is low — out of 900 questionnaires, only 262 have been returned, she said.
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