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Does Enforcement Reduce Voluntary Tax Compliance?, Leandra Lederman
Does Enforcement Reduce Voluntary Tax Compliance?, Leandra Lederman
Articles by Maurer Faculty
Governments generally use enforcement methods, such as audits and the imposition of penalties, to deter noncompliance with tax laws. Although this approach is consistent with most economic modeling of tax compliance, some scholars caution that enforcement may backfire, “crowding out” taxpayers’ intrinsic motivations to pay taxes to such an extent that they reduce their tax payments. This article analyzes the existing evidence to determine if this occurs. In fact, field studies suggest that enforcement tools, such as audits, are effective deterrents, generally greatly increasing tax collections. A few recent studies have found that audits have a negative effect on the …
Optimal Tax Compliance And Penalties When The Law Is Uncertain, Kyle D. Logue
Optimal Tax Compliance And Penalties When The Law Is Uncertain, Kyle D. Logue
Articles
This article examines the optimal level of tax compliance and the optimal penalty for noncompliance in circumstances in which the substance of the tax law is uncertain - that is, when the precise application of the Internal Revenue Code to a particular situation is not clear. In such situations, a number of interesting questions arise. This article will consider two of them. First, as a normative matter, how certain should taxpayers be before they rely on a particular interpretation of a substantively uncertain tax rule? If a particular position is not clearly prohibited but neither is it clearly allowed, what …
Crime And Punishment In Taxation: Deceit, Deterrence, And The Self-Adjusting Penalty, Alex Raskolnikov
Crime And Punishment In Taxation: Deceit, Deterrence, And The Self-Adjusting Penalty, Alex Raskolnikov
Faculty Scholarship
Avoidance and evasion continue to frustrate the government's efforts to collect much-needed tax revenues. This Article articulates one of the reasons for this lack of success and proposes a new type of penalty that would strengthen tax enforcement while improving efficiency. Economic analysis of deterrence suggests that rational taxpayers choose avoidance and evasion strategies based on expected rather than nominal sanctions. I argue that many taxpayers do just that. Because the probability of detection varies dramatically among different items on a tax return while nominal penalties do not take the likelihood of detection into account, expected penalties for inconspicuous noncompliance …
Legal Transitions, Rational Expectations, And Legal Progress, Kyle D. Logue
Legal Transitions, Rational Expectations, And Legal Progress, Kyle D. Logue
Articles
In the literature on legal transitions, the term "transition policy" is generally understood to mean a rule or norm that influences policymakers' decisions concerning the extent to which legal change should be accompanied by transition relief, whether in the form of grandfathering or phase-ins or direct compensation. Legal change within this literature is defined broadly, and somewhat counter-intuitively, to include any resolution of the uncertainty regarding what the law will be in the future or how the law will be applied to future circumstances. Thus, a legal change would obviously include an unexpected repeal of a tax provision, such as …