Estimating the "Tax Gap" at the State Level: The Case of Georgia's Personal Income Tax

James Alm () and Kyle Borders

No 1406, Working Papers from Tulane University, Department of Economics

Abstract: Most studies of the so-called "tax gap" (or the amount of taxes that should be collected but are not) focus on national taxes. This study provides several estimates of the "tax gap" for the State of Georgia's personal income tax. The methods use different estimation strategies for each of the three main components (underreporting of income, underpayment of tax liability, and nonfiling of a tax return), and then sum these separate estimates of the tax gap components to yield a range of estimates of the total tax gap in Georgia. The estimated range of the personal income tax gap is \$1.4 billion to \$2.9 billion, for a voluntary compliance rate that ranges from 89.8 percent to 80.8 percent. This study also provides some rough but suggestive estimates of the distributional effects of noncompliance, which indicate that noncompliance as a proportion of income may well be higher in lower income classes.

Keywords: tax gap; tax evasion; public budgeting; forecasting (search for similar items in EconPapers)
JEL-codes: H2 H26 H61 H68 H71 H83 (search for similar items in EconPapers)
Date: 2014-05
New Economics Papers: this item is included in nep-iue and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://repec.tulane.edu/RePEc/pdf/tul1406.pdf First Version, May 2014 (application/pdf)

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Journal Article: Estimating the “Tax Gap” at the State Level: The Case of Georgia's Personal Income Tax (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:tul:wpaper:1406

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