Do Government-Spending-Induced Deficits Lower Tax Compliance?

Cebula, Richard and Coombs, Christopher (2008): Do Government-Spending-Induced Deficits Lower Tax Compliance? Published in: Tax Notes , Vol. 125, No. 9 (30 November 2009): pp. 1007-1012.

Abstract

This study empirically investigates the deficit/tax-compliance hypothesis that higher federal budget deficits resulting from increased government spending lead to decreased federal personal income tax compliance in the U.S. The study period runs from 1960-2001 and adopts annual data. After allowing for a variety of factors that have been found previously to influence tax compliance/evasion, it is found that income tax evasion is an increasing function of budget deficits resulting from federal government spending increases.

• Item Type: MPRA Paper
• English Title: Do Government-Spending-Induced Deficits Lowe Tax Compliance?
• Language: English
• Keywords: personal income tax compliance; tax evasion; budget deficits; IRS audit rates; IRS penalties; unemployment rate
• Subjects: 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; H - Public Economics > H4 - Publicly Provided Goods > H41 - Public Goods; H - Public Economics > H6 - National Budget, Deficit, and Debt > H62 - Deficit ; Surplus

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