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Enforcement, Socioeconomic Diversity, and Tax Filing Compliance in the United States

James Alm (), Jeremy Clark () and Kara Leibel ()
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Kara Leibel: Office of Research, Internal Revenue Service, 1111 Constitution Avenue, N.W., 3rd Floor/017, Washington, DC 20224

Southern Economic Journal, 2016, vol. 82, issue 3, 725-747

Abstract: In this article, 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 socioeconomic 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, although 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.

JEL-codes: H24 H26 H31 (search for similar items in EconPapers)
Date: 2016
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Working Paper: Enforcement, Socio-Economic Diversity, and Tax Filing Compliance in the United States (2015) Downloads
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Handle: RePEc:sej:ancoec:v:82:3:y:2016:p:725-747