Cooperative Federalism: The Consequences of the Audit Information Exchange Agreements

Ugo antonio Troiano

No 24153, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Improving the efficiency of tax collection is essential for both development and fairness. This paper studies the Audit Information Exchange Agreements—partnerships between U.S. states and the federal government, signed between 1950 and 1971, to share data on income tax audits and enforcement techniques. Using difference-in-differences methods, I find that these agreements increased state income tax revenues by approximately 20%. I do not find evidence of a decline in population, on average. The findings are consistent with a spatial equilibrium model with costly migration in which evaders choose between compliance and relocation in response to increased enforcement salience.

JEL-codes: H21 H26 H77 N92 (search for similar items in EconPapers)
Date: 2017-12
New Economics Papers: this item is included in nep-acc, nep-iue, nep-pbe and nep-pub
Note: DAE LE PE POL
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Citations: View citations in EconPapers (3)

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