A Further Inquiry into Determinants of Aggregate Income Tax Evasion

Cebula, Richard and McGrath, Richard (2001): A Further Inquiry into Determinants of Aggregate Income Tax Evasion. Published in: Global Business & Economics Review-Anthology 2002 , Vol. 3, No. 1 (3 December 2002): pp. 343-349.

Abstract

This study empirically investigates the impact of a variety of factors on income tax evasion in the United States over the period 1973 to 1997. The aggregate estimates indicate that federal income tax evasion may be an increasing function of the federal personal income tax rate and the public’s dissatisfaction with government. In addition, income tax evasion may be a decreasing function both of penalties imposed by the IRS on unpaid taxes and IRS audit rates. Moreover, a trend variable that may to some extent reflect the impact of improved IRS income-detection technologies over time exhibits a negative and significant coefficient, implying that such technologies may diminish tax evasion.

• Item Type: MPRA Paper
• Language: English
• Keywords: income tax evasion; underground economy; tax rates; penalties; audit rates
• Subjects: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E26 - Informal Economy ; Underground Economy; 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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