Final answer:
Tad's behavior of not reporting income and justifying it by saying 'everybody cheats on taxes' is an example of rationalization, a defense mechanism where he substitutes acceptable reasons for his less-than-acceptable actions.
Step-by-step explanation:
The scenario described with Tad deciding to not report some income on his tax form and justifying his behavior by stating that everybody cheats on their taxes and that he needs the money more than the government showcases a classic example of rationalization. Rationalization is a defense mechanism where a person justifies their behavior by substituting acceptable reasons for less-acceptable real reasons. This mechanism allows individuals to ease their conscience by creating a seemingly rational reason for their actions when, in fact, the underlying motives may not align with societal norms or legal requirements.