Explaining the U.S. Income Tax Compliance Continuum

eJournal of Tax Research, Vol. 1, No. 2

Posted: 7 Jan 2005

See all articles by Brian Erard

Brian Erard

Carleton University - Department of Economics

Chih-Chin Ho

U.S. Internal Revenue Service

Abstract

Within an economy, tax compliance behavior falls along a continuum. At one extreme are households who fully report and pay their tax obligations despite any opportunities or incentives to cheat. At the other extreme are households who undertake considerable efforts to conceal their income and repudiate their tax responsibilities. Using a micro-simulation database, we undertake a preliminary statistical analysis of why 34 distinct occupational groups in the U.S. differ in their location along the compliance continuum. We find that compliance across occupations has a strong positive association with the share of income subject to third party information reporting and a strong negative association with the burden of preparing and filing a return.

Keywords: Tax Compliance, U.S. Income Tax

JEL Classification: H24, H22

Suggested Citation

Erard, Brian and Ho, Chih-Chin, Explaining the U.S. Income Tax Compliance Continuum. eJournal of Tax Research, Vol. 1, No. 2. Available at SSRN: https://ssrn.com/abstract=643942

Brian Erard

Carleton University - Department of Economics

1125 Colonel By Drive
Ottawa, Ontario K1S 5B6
Canada

Chih-Chin Ho (Contact Author)

U.S. Internal Revenue Service ( email )

1111 Constitution Avenue, NW
Washington, DC 20224
United States

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