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Enforcement, Socio-Economic Diversity, and Tax Filing Compliance in the United States

Author

Listed:
  • James Alm

    () (Department of Economics, Tulane University)

  • Jeremy Clark

    () (Department of Economics and Finance, University of Canterbury)

  • Kara Leibel

    () (Office of Research, Internal Revenue Service)

Abstract

In this paper we examine the determinants of tax filing compliance in the United States. We use county-level data on non-filing rates for the tax year 2000, obtained directly from the Internal Revenue Service. We include explanatory variables identified in the "rational compliance" framework, including an enforcement index against identified non-filers, the audit rate of filers, and the average penalty rate for both filers and non-filers. We also examine the role of socio-economic diversity on tax compliance, testing whether within-county heterogeneity in household income, language, race, and religion can help explain variation in non-filing rates. We find that non-filing is increasing with heterogeneity by race, though not by income or language, and that non-filing is decreasing with heterogeneity by religious membership. As for enforcement variables, we find that non-filing rates tend to fall with the enforcement index. Other variables have somewhat mixed results.

Suggested Citation

  • James Alm & Jeremy Clark & Kara Leibel, 2015. "Enforcement, Socio-Economic Diversity, and Tax Filing Compliance in the United States," Working Papers 1514, Tulane University, Department of Economics.
  • Handle: RePEc:tul:wpaper:1514
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    References listed on IDEAS

    as
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    Cited by:

    1. James Alm, 2017. "Is Economics Useful for Public Policy?," Working Papers 1702, Tulane University, Department of Economics.

    More about this item

    Keywords

    tax evasion; social capital; diversity;

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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