Personal Income Tax Evasion Determinants Revisited: An Exploratory Study Using Newly Available Data

Cebula, Richard and Foley, Maggie (2010): Personal Income Tax Evasion Determinants Revisited: An Exploratory Study Using Newly Available Data. Published in: Academy of Economics and Finance Journal , Vol. 2, No. 1 (30 November 2011): pp. 17-24.

Abstract

This study empirically investigates the determinants of aggregate federal personal income tax evasion in the U.S. using the most current IRS data available. In 2010, the IRS released a new series on personal income tax evasion data running through the year 2005. Using this new data, the present study seeks to identify any new as well as traditional determinants of domestic personal income tax evasion. Aside from investigating the most commonly recognized factors that allegedly influence tax evasion, such as a measure of average income tax rates and IRS audit rate and penalty interest rate levels, the public’s job approval rating of the President, the unemployment rate, the Tax Reform Act of 1986, and the yield on three-year Treasury notes, along with the percentage of filed tax returns that include itemized deductions, are investigated. With the exception of the three-year Treasury note yield, all of these factors are found to significantly influence the aggregate degree of personal income taxation over the 30 year period from 1976 though 2005, the most recent several years of which have not been previously investigated.

• Item Type: MPRA Paper
• Language: English
• Keywords: tax evasion; underground economy; tax rates; audit rates; Presidential job approval rating
• Subjects: D - Microeconomics > D1 - Household Behavior and Family Economics > D11 - Consumer Economics: Theory; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H21 - Efficiency ; Optimal Taxation; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H24 - Personal Income and Other Nonbusiness Taxes and Subsidies; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H26 - Tax Evasion and Avoidance; H - Public Economics > H3 - Fiscal Policies and Behavior of Economic Agents > H31 - Household

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