Constraints on IRS Control: An Alternative Approach to Tax Gap Analysis

12 Int'l J. L. & Pol. Sci. (2018, Forthcoming).

15 Pages Posted: 25 Aug 2018 Last revised: 3 Oct 2018

See all articles by Jack Manhire

Jack Manhire

Texas A&M University School of Innovation; Bush School of Government & Public Service

Date Written: 2018

Abstract

A tax authority wants to take actions it knows will foster the greatest degree of voluntary taxpayer compliance to reduce the "tax gap." This paper suggests that even if a tax authority could attain a state of complete knowledge, there are constraints on whether and to what extent such actions would result in reducing the macro-level tax gap. These limits are not merely a consequence of finite agency resources. They are inherent in the system itself. To show that this is one possible interpretation of the tax gap data, the paper formulates known results in a different way by analyzing tax compliance as a population with a single covariate. This leads to a standard use of the logistic map to analyze the dynamics of non-compliance growth or decay over a sequence of periods. This formulation gives the same results as the tax gap studies performed over the past fifty years in the U.S. given the published margins of error. Limitations and recommendations for future work are discussed, along with some implications for tax policy.

Keywords: income tax, tax compliance, tax law, tax gap

JEL Classification: H2, H24, H25, H26, K34

Suggested Citation

Manhire, Jack, Constraints on IRS Control: An Alternative Approach to Tax Gap Analysis (2018). 12 Int'l J. L. & Pol. Sci. (2018, Forthcoming)., Available at SSRN: https://ssrn.com/abstract=3218110

Jack Manhire (Contact Author)

Texas A&M University School of Innovation

1249 TAMU
College Station, TX 77843-1249
United States

Bush School of Government & Public Service ( email )

4220 TAMU
College Station, TX 76845
United States

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