Estimating Tax Noncompliance With Evidence from Unaudited Tax Returns

26 Pages Posted: 11 Apr 2007

See all articles by Naomi E. Feldman

Naomi E. Feldman

Federal Reserve Board

Joel B. Slemrod

University of Michigan, Stephen M. Ross School of Business; National Bureau of Economic Research (NBER)

Date Written: 0000

Abstract

This article estimates the degree of tax noncompliance using evidence from unaudited tax returns. Measurements of noncompliance are derived from the relationship between reported charitable contributions and reported income from wages and salary as compared to alternative reported income sources such as self-employment, farm and other small business income. Assuming that the source of one's income is unrelated to one's charitable inclinations and that the ratio of true income to taxable income does not vary by income source, any difference in the relationship between charitable contributions and the source of income can be attributed to (relative) underreporting by the individual. We find that the implied amount of noncompliance is significant and that it varies by source of income, as well as between positive and negative values of each type of income.

Suggested Citation

Feldman, Naomi E. and Slemrod, Joel B., Estimating Tax Noncompliance With Evidence from Unaudited Tax Returns (0000). The Economic Journal, Vol. 117, Issue 518, pp. 327-352, March 2007. Available at SSRN: https://ssrn.com/abstract=978570 or http://dx.doi.org/10.1111/j.1468-0297.2007.02020.x

Naomi E. Feldman (Contact Author)

Federal Reserve Board ( email )

Washington, DC 20551
United States

Joel B. Slemrod

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Room R5396
Ann Arbor, MI 48109-1234
United States
734-936-3914 (Phone)
734-763-4032 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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