Do Audits Affect Voluntary Tax Compliance?

39 Cayman Fin. Rev. 40 (2015)

6 Pages Posted: 31 Jan 2014 Last revised: 21 Jun 2016

See all articles by Jack Manhire

Jack Manhire

Texas A&M University School of Innovation; Bush School of Government & Public Service

Date Written: 2015

Abstract

The IRS’s audit enforcement policy is based on the principle that audits deter taxpayers from cheating and therefore increase voluntary tax compliance. For more than forty years, however, there has been considerable debate over whether higher audit rates actually contribute to increased voluntary tax compliance. Many scholars today believe that this “deterrence theory” is incorrect since the overall data does not comport with the theory. Taxpayers, therefore, must voluntarily comply with their tax obligations for reasons other than an increased probability of getting audited. While this conclusion might be true for individual income tax returns overall, it appears there are certain sub-categories of tax returns for which audits actually do matter. For these groups, audits might affect voluntary tax compliance levels more directly.

Keywords: tax evasion; audit probability; tax compliance; political economy; tax law; probability theory; philosophy of probability

JEL Classification: A12, C1, C5, D8, H2, H26, K34, K42, Z00

Suggested Citation

Manhire, Jack, Do Audits Affect Voluntary Tax Compliance? (2015). 39 Cayman Fin. Rev. 40 (2015). Available at SSRN: https://ssrn.com/abstract=2387983 or http://dx.doi.org/10.2139/ssrn.2387983

Jack Manhire (Contact Author)

Texas A&M University School of Innovation

1249 TAMU
College Station, TX 77843-1249
United States

Bush School of Government & Public Service ( email )

4220 TAMU
College Station, TX 76845
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
264
Abstract Views
1,990
rank
114,096
PlumX Metrics