Tax Study: Scientists More Likely to Cheat Than Lawyers

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Wesley Snipes is serving three years for tax evasion. Actors are more likely to cheat on their taxes than CEOs. (Lucas Jackson/Reuters)

The butcher. The baker. The Candlestick maker. They are not just three guys in a tub. They’re probably tax cheats.

Tax day comes three days late in 2011 on Monday, April 18th, instead of April 15th. But even after the deadline to file your taxes comes and goes, there will be hundreds of thousand of Americans who haven’t fully paid what they owe to Uncle Sam. The annual tax gap is estimated at about $350 billion. That’s the difference between what is owed in taxes every year and what gets paid on time. (More on See the 10 riskiest tax return moves)

So who isn’t paying? Scientists, it appears. A recent study looked at tax cheats and found that one of the best indicators of who is likely to try to get around paying their taxes in full is their profession. The study, by University of Chicago doctoral student Oscar Vela, looked at the percent people misrepresented their income and then ranked them by profession. There were of course some industries you would expect at the top of the list – landscapers, electricians and general contractors. In those professions, people usually work for themselves and are often paid in cash, making misreporting income easier.

But there where some surprises. Lawyers it turns out are the least likely to cheat. Another group of people most likely to pay their taxes in full: chief executive officers. On the other end of the spectrum are scientists, who were on average likely to understate their income by as much as 35%. Journalists didn’t rank very high in tax integrity either. On average people in the media and arts tended to understate their income by 25%. At the top of the list were bakers and butchers. That group on average understated their income by 40%.

So why would people in some professions generally be better tax payers than others. Vela’s conclusion was not that some professions attract more virtuous people than others, though lawyers you might like to think so. Vela found that people in professions where the appearance of integrity seemed to matter were the most likely to pay their taxes. His conclusion was that as much as we would like to think so we pay taxes out of  the goodness of our hearts, or even because we are fearful of fines or worse. Instead we based the decision on how it will affect our careers. Typical.

One drawback of the study was because of IRS codes Vela was only able to look at general occupation categories. Here’s the top 10 categories of tax cheats by IRS general occupation group, and a sampling of some of the jobs that the IRS puts into those categories. (More on How to file your taxes from your smartphone or tablet)

1) Production Workers – bakers, butchers, factory workers, jewelers

2) Building and Ground Maintenance – cleaning staffs, janitors, landscapers, pest control workers

3) Transportation and Material Moving Operations – bus drivers, parking lot attendants, movers

4) Construction Trade – contractors, electricians, house painters

5) Install, Maintain and Repair – auto mechanics, home Appliance repairmen, locksmiths

6) Life, Physical and Social Sciences – chemists, economists, zoologists

7) Protective Services – crossing guards, firefighters, police, security guards

8 ) Personal Care – childcare workers, funeral attendants, manicurists

9) Arts, Design, Entertainment, Sports and Media – actors, editors, public relations specialists

10) Healthcare Support – dental assistants, home health aides, massage therapists


Who Cheats on their taxes? (Economix via New York Times)