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Teaching Political Economy: On the Economics Significance of the Public's Job Approval Rating of the President

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  • Cebula, Richard
  • Smith, Heather

Abstract

This study empirically investigates the hypothesis that the lower the public’s job approval rating of the U.S. President, the higher the degree of aggregate federal personal income tax evasion in the U.S. Using annual data on aggregate federal personal income tax evasion for the period 1960-2001 compiled by Feige, with 2001 being the most recent year for which these data are currently available, and allowing for such factors as federal income tax rates, IRS tax return audit rates, the tax-free municipal bond yield, the interest rate penalty on detected unreported income, public dissatisfaction with government officials (other than the U.S. President), and the Tax Reform Act of 1986, this study finds consistent empirical support for the hypothesis that income tax evasion is a decreasing function of the Presidential approval rating, i.e., that the lower (higher) the President’s approval rating, the greater (lower) the degree of aggregate federal personal income tax evasion. Finally, use of two well-known alternative estimates of the aggregate degree of federal personal income tax evasion yields results generally consistent with these conclusions.

Suggested Citation

  • Cebula, Richard & Smith, Heather, 2008. "Teaching Political Economy: On the Economics Significance of the Public's Job Approval Rating of the President," MPRA Paper 56785, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:56785
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    References listed on IDEAS

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    8. Fox, Gerald & Phillips, Earl N., 2003. "Interrelationship between presidential approval, presidential votes and macroeconomic performance, 1948-2000," Journal of Macroeconomics, Elsevier, vol. 25(3), pages 411-424, September.
    9. Cebula, Richard J & Koch, James V & Paul, Chris, 1998. "Income Tax Rates and the Public's Attitude toward Government in the United States: A Brief Empirical Note," Public Finance = Finances publiques, , vol. 53(3-4), pages 495-498.
    10. Brian Erard & Jonathan Feinstein, 1994. "The Role of Moral Sentiments and Audit Perceptions in Tax Compliance," Carleton Industrial Organization Research Unit (CIORU) 94-03, Carleton University, Department of Economics.
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    12. Cebula, Richard J., 2007. "Do tax-related public policies influence the public’s approval of a democratic nation’s principal political leader? An application to the U.S," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 60(3), pages 305-317.
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    More about this item

    Keywords

    underground economy; tax evasion; political economy; presidential job approval rating;
    All these keywords.

    JEL classification:

    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

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