The Tax Reform Act of 1986: An Assessment in Terms of Tax Compliance Behavior
AbstractThe Tax Reform Act of 1986 (TRA) has sometimes been portrayed as a genuine effort to introduce fairness, simplicity, and economic growth considerations into the Internal Revenue Code of the U.S. Although regarding the TRA as far from adequate, the late Richard Musgrave did in fact regard this statute as yielding many significant changes that improved the equity and efficiency of the process of federal income taxation. The present study investigates empirically whether the TRA was so well received by taxpayers as to increase (at least in theory) the degree of federal personal income tax compliance. Although the estimates imply that this may have initially been the case, a more in-depth analysis reveals that the TRA actually exercised a statistically zero net impact on the aggregate degree of personal income tax compliance over the longer run, implying that the TRA merely required a sufficient amount of time for tax evaders to learn the new law so that they could ultimately resume their tax-evasion ways.
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Bibliographic InfoArticle provided by Camera di Commercio di Genova in its journal Economia Internazionale / International Economics.
Volume (Year): 62 (2009)
Issue (Month): 2 ()
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Tax Reform; Tax Reform Act; Income Tax Evasion;
Find related papers by JEL classification:
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
- K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
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