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The Effect of Tax and Audit Rates on Compliance with the Federal Income Tax, 1977-85

Dubin, Jeffrey A. and Graetz, Michael J. and Wilde, Louis L. (1987) The Effect of Tax and Audit Rates on Compliance with the Federal Income Tax, 1977-85. Social Science Working Paper, 638. California Institute of Technology , Pasadena, CA. (Unpublished)

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This paper develops a game-theoretic model of the effects of state and federal income tax rates and audit rates on compliance with the federal income tax. Using data drawn primarily from the Annual Reports of the Commissioner of Internal Revenue for the years 1977-85, we find empirical confirmation of the model's prediction that increases in the tax rates increase compliance. We also investigate the overall performance of the federal revenue collection process and find that the entire IRS estimate of the increase in individual noncompliance during 1977-85 is more than accounted for by the decrease in auditing over the same period.

Item Type:Report or Paper (Discussion Paper)
Group:Social Science Working Papers
Series Name:Social Science Working Paper
Issue or Number:638
Record Number:CaltechAUTHORS:20170911-141344635
Persistent URL:
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:81306
Deposited By: Jacquelyn Bussone
Deposited On:11 Sep 2017 23:53
Last Modified:03 Oct 2019 18:41

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