Involuntary compliance: Cultural aspects of the American income-tax transaction

This work examines Americans' understandings of money, looking through a particular window--income taxation. The problem I address is why, in a nation where cash and capital are so important, most people are poorly informed about and intimidated by the basic money matters on which their very livelihood depends. As a tax practitioner doing anthropology, I utilized a combination of qualitative anthropological techniques including participant observation, work with key informants, and followup interviews on particular topics with lay taxpayers. The principal findings include the following. Although our tax and money systems are complex, they derive from simple conceptual systems which could help people deal with complexity were the basics taught to them. They generally are not; simple, core concepts like profit are systematically omitted. What is taught to societal entrants are value-laden financial ideas based in metaphoric thinking. We act on understandings of money as a controllable solid chunk we can get our hands on (tax refunds), an imperceptibly dribbling liquid (tax withholding, escrow), a growing thing potted in an investment account, or countable (perhaps nontaxable) cash. We do this in the face of an increasingly complex monetary system based on different ideas of ownership than ours. Acting on these lay understandings leads more often to financial loss than gain, despite the assertions of many financial professionals that "it doesn't really matter" that laypeople understand money and taxation imperfectly. This essay concludes that these ways of lay thinking parallel the pronouncements and practices of employers, financial professionals, the financial media, and in general "proxy institutions"--the visible structures of social management and control in the United States--so closely that the benefits accruing to the institutions, and losses to individuals, are no accident. These understandings are ideological in at least two ways: as metaphors which sometimes conceal other, more accurate ways of viewing our money, and as playing into the hands of the powerful actors in U.S. society. Their push-pull effect cannot be localized within specific groups; our lay understandings of money derive from, and help constitute, a truly national financial culture.