Is a Tax Amnesty a Good Fiscal Policy? A Review of State Experience in the USA

Posted: 17 Mar 2013

See all articles by Hari Luitel

Hari Luitel

Algoma University

Gerry Mahar

Algoma University

Date Written: March 17, 2013

Abstract

During and immediately after the recessions of 2001 and 2007-2009, tax amnesties in the American states rebounded in popularity. Is a tax amnesty a good fiscal policy? To address this question, we review the experience of US state tax amnesty between 1982-2012 and identify the literature that support the argument that tax amnesties not only raise higher tax revenues for the state treasury in the short term, but also do not have negative effects on tax compliance in the long term. We then point out some of the statistical pitfalls in the literature and explain why they are important.

Keywords: tax amnesty, tax revenue, tax compliance

JEL Classification: H20, H29, H71, H80

Suggested Citation

Luitel, Hari and Mahar, Gerry, Is a Tax Amnesty a Good Fiscal Policy? A Review of State Experience in the USA (March 17, 2013). Available at SSRN: https://ssrn.com/abstract=2234663 or http://dx.doi.org/10.2139/ssrn.2234663

Hari Luitel (Contact Author)

Algoma University ( email )

1520 Queen Street East
Sault Ste. Marie, Ontario P6A 2G4
Canada
705-949-2301 (Phone)
705-949-6583 (Fax)

HOME PAGE: http://www.algomau.ca/

Gerry Mahar

Algoma University ( email )

1520 Queen St. East
Sault Ste. Marie, Ontario P6A 4G4
Canada
705-949-2301 ext 4758 (Phone)
705-949-6583 (Fax)

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