Format of Original
Missouri Valley Economic Association
Journal of Economics
Original Item ID
Shelves: HB1 .M56a Memorial Periodicals
It is well-known that every year a substantial amount of income evades income taxation. This is obviously a significant policy problem. To solve this problem, the tax authorities must have information about the factors that taxpayers consider when deciding how much income to report on their tax returns. The need for such information has prompted a number of theoretical and empirical studies of the evasion problem.
In this paper some aggregate empirical evidence on income tax evasion in the U.S. is provided. This is accomplished by specifying an aggregate tax evasion function which is estimated over the period 1947-78. The results provide (1) empirical evidence which supports some of the predictions of the microtheory, (2) insights where the theoretical results are indeterminant, and (3) an indication of the sensitivity of a measure of aggregate evasion to changes in the aggregate variables which correspond to the microtheoretical determinants of evasion.
The remainder of this paper is organized in the following way. Section I contains background information on the results reported in some of the previous literature. In Section II, an empirical model is specified and estimated, and the results are presented. This is followed in Section III by brief discussion of some of the possible implications of these results, along with suggestions for further research.