Economic and Political Determinants of Tax Amnesties in the U.S. States

15 Pages Posted: 31 Oct 2006

See all articles by Eric Le Borgne

Eric Le Borgne

International Monetary Fund (IMF)

Date Written: September 2006

Abstract

This paper revisits earlier studies on the determinants of tax amnesties. The novel findings are (i) amnesties are more likely to be declared during fiscal stress periods, and (ii) political factors significantly affect the introduction and timing of amnesties. In particular, the paper empirically disentangles opposite theoretical effects to show that governors perceive amnesties as another revenue source (rather than a tax increase alternative). Finally, supporting evidence shows that by breaking horizontal equity, amnesties might be perceived as unfair: a significant correlation exists between governors who lost their reelection bids and the introduction of a tax amnesty during their election years.

Keywords: Tax amnesty, Gubernatorial elections, Cox model

JEL Classification: H20, H26, H29

Suggested Citation

Le Borgne, Eric, Economic and Political Determinants of Tax Amnesties in the U.S. States (September 2006). IMF Working Paper No. 06/222, Available at SSRN: https://ssrn.com/abstract=941284

Eric Le Borgne (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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