The Inflation Reduction Act's Impact on Tax Compliance—and Fiscal Sustainability

29 Pages Posted: 21 May 2023

See all articles by Natasha Sarin

Natasha Sarin

Yale University Law School and Yale School of Management

Mark J. Mazur

U.S. Department of the Treasury, Internal Revenue Service

Date Written: May 15, 2023

Abstract

The Inflation Reduction Act (IRA) includes a once-in-a-generation investment in the Internal Revenue Service (IRS) to modernize America’s tax administration and, by doing so, meaningfully increase compliance with the nation’s tax laws. We consider the impact of this investment on new tax revenue that the agency will be able to collect. Our rough estimate suggests that IRS funding will raise at least $560 billion ($480 billion, net) over the course of the next ten years—and, depending on the extent of taxpayer’s behavioral response to greater enforcement presence, could easily raise closer to $1 trillion. This is much larger than official government estimates.

Keywords: IRS, tax administration, government scorekeeping

JEL Classification: H26, H83

Suggested Citation

Sarin, Natasha and Mazur, Mark J., The Inflation Reduction Act's Impact on Tax Compliance—and Fiscal Sustainability (May 15, 2023). Available at SSRN: https://ssrn.com/abstract=4449161 or http://dx.doi.org/10.2139/ssrn.4449161

Natasha Sarin (Contact Author)

Yale University Law School and Yale School of Management ( email )

127 Wall St.
New Haven, CT 06511
United States
2034325552 (Phone)
20001-4959 (Fax)

Mark J. Mazur

U.S. Department of the Treasury, Internal Revenue Service

1111 Constitution Avenue, NW
Washington, DC 20224
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
447
Abstract Views
2,516
Rank
121,978
PlumX Metrics