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Amnesty, Enforcement, and Tax Policy

In: Tax Policy and the Economy, Volume 1


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  • Herman B. Leonard
  • Richard J. Zeckhauser


Amnesties are widely used in society to rehabilitate past sinners, to collect resources, such as library books, that would otherwise be unrecoverable, and to make enforcement easier by reducing the ranks of delinquents. Over the past four years, tax amnesties have emerged as a major instrument of state revenue policy. Twenty states conducted amnesties. Record collections were made by New York ($360 million) and Illinois (income tax amnesty dollars 3.4% of collections). Amnesties took in dollars that would probably have escaped otherwise, and tax rolls were bolstered. Tax amnesties also have costs, however. They may anger honest taxpayers, diminish the legitimacy of the tax system by pardoning past evasion, and decrease compliance by making future amnesties seem more likely. Shou1.d the federal government, aswirl in tax reform and suffering from an estimated $100 billion tax evasion problem, now offer an amnesty of its own? What type of federal program would most likely be offered? What would it be likely to accomplish? State tax amnesties have generally bean coupled with enhanced enforcement efforts, a feature intended to preserve the legitimacy of the tan system. The amnesty/enforcement combination twists the penalty schedule, lowering it non raising it later, in that way encouraging prompt payment. With no past sins to hide, future compliance also becomes less costly, hence more probable. Any federal amnesty, we predict, would be accompanied by a strengthening of enforcement. After reviewing the state experience, we speculatively estimate that a federal amnesty/enforcement to annual revenues on the order of $10 billion.

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This chapter was published in:

  • Lawrence H. Summers, 1987. "Tax Policy and the Economy, Volume 1," NBER Books, National Bureau of Economic Research, Inc, number summ87-1.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 10929.

    Handle: RePEc:nbr:nberch:10929

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    Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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    Cited by:
    1. Bruno Chiarini & Marco Di Domizio & Elisabetta Marzano, 2008. "Why do underground reducing policies often fail their scope? Some answers from the Italian experience," Working Papers 8_2008, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.
    2. Nicolas Marceau & Steeve Mongrain, 2000. "Amnesties and Co-operation," International Tax and Public Finance, Springer, vol. 7(3), pages 259-273, May.
    3. Eric Le Borgne, 2006. "Economic and Political Determinants of Tax Amnesties in the U.S. States," IMF Working Papers 06/222, International Monetary Fund.
    4. Julio López Laborda & Fernando Rodrigo Sauco, 2002. "El análisis económico de las amnistías fiscales: ¿Qué hemos aprendido hasta ahora?," Hacienda Pública Española, IEF, vol. 163(4), pages 121-153, December.
    5. James Alm, 1998. "Tax Policy Analysis: The Introduction of a Russian Tax Amnesty," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper9806, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.


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