Spectacular cases of tax evasion always arouse a broad public interest. And certainly the first impression in response to this is often that the tax evaders may have acted only for one reason: greed for money. But is that really the case? Or perhaps we need to look at the actions of tax evaders in a more nuanced way in order to better understand the phenomenon of tax evasion? One should also go beyond the pure motivation for tax evasion and analyze how tax evaders came to their decision. Perhaps this also helps to make the handling of tax evasion a little more solution-oriented.

Today we are talking about a topic that could easily be ticked off at first glance. We want to look at the motivation for tax evasion and what the process might be until this decision. Certainly, it is a daring attempt to approach the answer to these questions with empathy. But it may also be a rewarding one. Because it makes us aware of how this can happen, although there is often hardly any reason for such a criminal act before. Because many tax evaders are basically far from being criminals. Well, at least they see themselves that way.

Certainly, when we look at the area of tax evasion, which relates to otherwise blameless citizens, we neglect the equally important aspect of tax evasion, which takes place in the context of other criminal activities and logically leads to money laundering, that is, it is generally associated with organised crime.

In any case, it should be clear that the motivation for tax evasion in this particular case is obvious anyway. Because if you generate profits through crime, then you can hardly enter them properly and frankly as such in the tax return. At least, there is no income type that appears as bank robbery or extortion in the mantle sheet for income tax returns. In the case of other crimes, this would be possible, namely in the case of certain industries, such as the trade in illegal substances and other goods of all kinds, but this is also no reason for criminals to avoid tax evasion by filing a correct tax return. The danger that an honest tax declaration leads to the conviction of crimes is just so great that criminals prefer to accept tax evasion right away, especially since this also offers financial advantages. So here the motivation for tax evasion is obvious.

So let’s turn to the motivation for tax evasion in general. Of course, this means that we are excluding from our considerations tax evasion where there is no intention. Such cases, which lead to tax evasion, for example through carelessness or other unintentional omission (for example out of ignorance), are also punishable. But the point is that there is no motivation here. But we want to think about this very aspect.

So we are only concerned about the tax evaders who are actually aware of their actions, or at least should be. We propose a subdivision: on the one hand, we want to understand those tax evaders who decide to evade taxes for purely financial reasons. On the other hand, we are also dealing with those people who merely accept tax evasion because other motives that are crucial for them are in the foreground. Even at this point, one should realize that greed for money is by no means the only motivation for tax evasion.

Right at the beginning, the financial motivation for tax evasion is omnipresent. It therefore always appears even when completely different reasons lead to tax evasion. Therefore, we will encounter it again and again in the following section on non-financial motivation, even if this is dedicated to the other motives.

3.1.1. Greed for money as a motive for tax evasion

But anyone who thinks that we only address pure greed for money as a motivation for tax evasion will be surprised in the end.

Nevertheless, we take the purely financial motivation for tax evasion as our first motive. It is the most easily understood of all. It is therefore no wonder that the general public, but also the tax investigation, in particular proceed from this motivation when they are confronted with tax evasion. But is it really so surprising?

Money is a modern substitute for security. Those who have money can afford anything. So with money we fulfill what our primal instincts constantly demand of us: livelihood security and reproduction, or in other words, to live. But we as humans are blessed with reason, at least to some extent. Because in fact we often make our decisions affectively, so that a rational treatment of the question of whether to evade taxes often takes place only in the beginning. Here, the thesis is put forward that tax evasion occurs less because of any motivation than rather a shortened decision-making.

But once it has come to tax evasion, our ratio is usually hardly enough to rethink. On the contrary, all the energy we then have to deal with the topic gives us reasons that justify our already weak-rational decision, but at least whitewash it. We reassure our conscience with the hope that tax evasion will remain hidden. Who is going to get us on the hook? Considerations that analyze which risks of detection actually exist – Jealousy and revenge of third parties are leading here - one leads rather reluctantly and thus at best shortened. No wonder, then, that new tax evaders often react with resignation when they suddenly realize that their mental construct with which they have built up tax evasion collapses like a house of cards. For example, Uli Hoeneß could note this.

3.1.2. Financial distress as a motive for tax evasion

However, there are also other financial motives for tax evasion that do without the aspect of pure greed for money. Because if there are financial worries, this can also be a strong incentive to evade taxes. After all, this can mean that you save a lot of money through tax evasion, money that you desperately need for other purposes.

If you look at this motivation for tax evasion, you might have a little more empathy. Finally, the control evasion serves here to alleviate an emergency. The example of Alfonso Schuhbeck could be cited. This is also the argument that tax evasion is not carried out freely, but only because you were forced to do so.

But it is also clear that the same patterns of thought and behavior contribute to this action as they do to the motive of pure greed for money. Surprisingly, both motives are very similar in their human nature. Because the emergency situation also calls our very own survival instincts on the plan. So we only act this way because we are programmed to do so. However, if we only look at this aspect, we also ignore the fact that we have far more mental capacities to control our actions.

Exciting is now also the question of what motivation for tax evasion can do without the financial aspects in the foreground. There are indeed some possibilities. And much more than you might think.

3.2.1. Lately noted tax evasion further conceal

On the one hand, it may be that you have already evaded taxes unconsciously and unintentionally. However, if you then find out, there is often an inhibition threshold to correct this. Who likes to go to the police voluntarily to report? It is at least a little tempting to just sit it out. Perhaps the limitation period has expired soon? And yes, suddenly you also think about the financial benefit of tax evasion.

3.2.2. Endangerment of social standing

Social aspects may provide a similar reason. If, for example, you as a rising athlete, influencer or artist have consciously or unconsciously evaded taxes in the past, then submitting a self-disclosure would certainly not throw a good light on your own person (and thus also brand). Maybe it will lose important sponsors or orders. If one could really ensure that self-disclosure would remain anonymous and thus hidden from the public, as actually regulated by law, one would perhaps think differently and make self-disclosure. But it is probably too late for that at some point. So one hopes that tax evasion will remain unrecognized. And yes, at the latest from this point on, one also thinks of the financial advantage. But that usually ends the thinking.

In addition, there have actually been cases where prominent tax evaders were betrayed to the media despite legally guaranteed anonymity during the tax investigation. And at the latest in a court case against prominent tax evaders, a face-saving public approach to tax evasion is hardly possible. A possible repentance no longer plays a role.

3.2.3. Tax evasion as a political statement

Others, on the other hand, may think that they live in an unjust state anyway, which also takes the last cent from their pocket. Here and in similar cases, the motivation for tax evasion is primarily a political one. The fact that it is at the same time anti-societal may either be ignored or by no means perceived. Perhaps this also has another motive, namely that this should deliberately harm society because it is hostile to it anyway.

Either way, in this case, tax evasion is not a goal or side effect, but a means of fulfilling other motives. The truth is, however, that the motivation described here can only be advanced to justify the existence of a purely financial motivation for tax evasion and thus to displace it.

3.2.4. Tax evasion as an extreme measure in asset protection

And maybe there are people who see their motivation for tax evasion as a pure protective measure. After all, it is their money that they would also defend against burglars or other people who would like to take it from you, such as thieves, beggars and parasites. This can also be a less financial and more purely emotional motivation for tax evasion. Then it would be regarded as an excessive act of self-defense, which, however, takes place outside the law.

3.2.5. Tax evasion due to alleged superiority

From a similar direction, the motivation for tax evasion may come, if you think yourself smarter than everyone else. Paying taxes, so this way of thinking, is only something for people who surrender to their fate. For makers and other hard-hitting types, however, it is a trivial offense, a kind of self-evidentness, even a logical compulsion. You simply disregard laws by virtue of your own superiority. Bringing the supposedly overbearing state of authority to the justified taxes is then often at least as important as the financial advantage obtained by it. This arrogant attitude is also very common.

So, as we see, it is less the actual motivation that leads to tax evasion than the fact that our decision-making is easily corruptible. We are tempted by our instincts because we are too often unable to realize that we are making a mistake. We see only one advantage, all potential disadvantages easily disappear behind a wall of evasions and false arguments. There is hardly any talk of morality and social responsibility anyway. Or has anyone ever heard from a confessed tax evader that one of these aspects also played a role in the decision to evade taxes? In hindsight, when convicted of tax evasion, one occasionally recalls all these things that were previously perceived at best as ballast, if at all.

The conclusion of our analysis of the motivation for tax evasion and the processes leading to such a decision is therefore that there is a lack of rationality. We all know the consequences, both positive and negative, of tax evasion. What we lack, however, is a sensible way of dealing with it, in other words making the decision consciously and in accordance with purely rational aspects. Because obviously our thinking ability for such decisions is either only conditionally suitable or too little trained. Whoever commits tax evasion may follow his human nature, but he also refuses his most essential quality, his rationale.

Because there are better alternatives. Taxes are also saved by optimizing them in a legal way. As tax consultants who love tax law especially for this reason, we know that this is the more attractive choice. Because if you are convicted of tax evasion, the consequences are enormous. In addition to the tax, which could have been optimised in terms of design, there are also heavy penalties, surcharges and interest rates.

The question now is how to deal with it as a society and as a state. Do you leave the reaction to Justice alone? Or should we develop mechanisms that proactively prevent us from falling into at least some of these motives? Because, as we all know, tax evasion is a widespread phenomenon that causes enormous damage. We also do not want corruption and fortunately we have managed to build a society in Germany that is largely free of it, at least as far as our everyday life is concerned. This is not a matter of course, but the result of our joint efforts.

5.2.1. Optimize legal measures to prevent tax evasion

But what measures could be taken that could save us more effectively than before from succumbing to most types of tax evasion motivation? Instead of threatening with punishment in any form as before, perhaps the lever should be used at other points. Namely, more targeted, on the respective motives.

5.2.1.1. Increased consideration in financial emergency situations

This might make it easier for people who commit tax evasion out of financial hardship to face reality. For example, deferrals and decrees could be used more frequently as a measure before a step into insolvency. This also worked in the early days of the corona pandemic. Here, the tax offices should more often agree to an examination of a real financial exceptional situation, instead of risking that their insistence on rightly due taxes leads to tax evasion. Because as a result, the taxes of the public sector are lost anyway completely. Logically, it is still better to tie the taxpayers to themselves instead of losing them to the anonymity of tax evasion.

5.2.1.2. Creation of opportunities for anonymous self-disclosure

You could also introduce ways to anonymously submit self-disclosure. The persons could transfer the evaded tax to a tax consultant, so that he forwards the money anonymously to the finance. In return, tax evaders received an electronic confirmation of receipt. Should the tax investigation then pursue the tax evasion, one would have a proof and the investigation could be stopped after a short examination.

At least it would reach some potential tax evaders, namely those who are most willing to take such a step. Perhaps this could even convince one or the other criminal who refrains from submitting a proper tax return merely because of his activity to pay taxes anyway.

5.2.1.3. Making the prospect of tax evasion more widely known

It is also possible to expand the general understanding among the population of how many means the modern tax investigation has to detect tax evasion. When tax CDs were first used by Swiss banks to detect tax evasion, this triggered a wave of self-disclosure. Let us keep the pressure up permanently, even if we risk making some of the tools of modern tax investigation known.

This would also help if politicians of all parties put the fight against tax evasion more often in the media. However, it should also be clear that this can only be achieved convincingly if words are followed by deeds. It must become much clearer that tax evasion, regardless of the respective motivation, is by no means worthwhile.

5.2.2. Optimize skills development towards conscious action

But it is also clear that the possibilities for motivation to move away from tax evasion are relatively limited. Because a large part of the tax evaders will probably never be reached, because they are insufficiently aware of their actions and in many cases this will not change for a lifetime.

A different approach is therefore of a general nature and rather of a long-term effect. Here, the creation of the appropriate awareness should be the goal of general promotion. This could be started, for example, by promoting more conscious action in education, especially in schools. That we should refrain from actions that ultimately harm ourselves, is probably clear to everyone. Finally, we learn this from childhood. But as we learn to recognize when we are at the crossroads between reason and instinct, that is still far too rarely in the foreground. Above all, this should be optimized.