The Tax Reform Act of 1986: An Assessment in Terms of Tax Compliance Behavior

Richard Cebula (), Christopher Coombs () and Bill Z. Yang ()
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Bill Z. Yang: Georgia Southern University, Postal: P.O.Box 8152 - Statesboro, GA 30460-8152 U.S.A., http://www.georgiasouthern.edu/

Economia Internazionale / International Economics, 2009, vol. 62, issue 2, 145-162

Abstract: The 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.

Keywords: Tax Reform; Tax Reform Act; Income Tax Evasion (search for similar items in EconPapers)
JEL-codes: H24 H26 K42 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (7)

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