In a 2008 article, tax compliance was viewed as an individual psychological decision influenced by a dynamic interaction of (1) the power of tax authorities versus (2) the trust in the tax authorities (Kirchler, et al., 2008). The framework for tax compliance operates on a continuum between an antagonistic climate ("power") and a synergistic climate (trust). In an antagonistic climate, taxpayers and tax authorities work against each other. Tax authorities perceive taxpayers as "robbers" who try to evade whenever possible. Taxpayers feel persecuted by the tax authorities and feel it right to hide and evade paying tax when possible. Accordingly, higher levels of Power are required to ensure compliance. On the other hand, a synergistic climate can be characterized by the idea that tax authorities perform a service for the community and are a part of the same community the individual taxpayers belong to. The tax authority's approach could be described as "service and client." In this climate, voluntary compliance is likely to be high with individuals less likely to consider the chances of tax evasion and more likely to contribute their share out of a sense of obligation. However, very high levels of Trust are required to ensure compliance. As a result, the IRS tends to utilize a blend of Power and Trust that often shifts over time (sometimes leaning too far to the Power side, then too far to the Trust side). This dynamic is represented by the following exhibit: The levels of Power run along the bottom left (low to high), the levels of Trust along the bottom right, and the effect on taxpayer voluntary compliance is along the top. As shown in the exhibit, Low Power and Low Trust leads to minimal voluntary compliance. Maximum compliance can be reached with High Power or High Trust; however, there is always a mix of Power and Trust. The authors contend there is a tradeoff wherein increases in Power tend to cause decreases in Trust. At the same time, increases in Trust may reduce the need for Power. The rapid decline to Low Power and Low Trust is considered a "slippery slope" leading to poor taxpayer compliance. The IRS estimates the "tax gap" to be $500 billion annually. It consists of taxpayers underreporting income (or over reporting deductions), underpaying taxes owed, or not filing tax returns. Questions for you: 1. How can the Kirchler, et al. article analysis be used to reduce the tax gap? 2. Where do you think our current tax system falls on the exhibit in terms of High, Medium, or Low Power and High, Medium, or Low Trust?