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Estimating Tax Noncompliance with Evidence from Unaudited

Author

Listed:
  • Naomi E. Feldman

    (BGU)

  • Joel Slemrod

    (University of Michigan)

Abstract

This paper estimates the degree of tax noncompliance using evidence from unaudited tax re-turns. Measurements of noncompliance are derived from the relationship between reported charitable contributions and reported income from wages and salary as compared to alterna- tive 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

  • Naomi E. Feldman & Joel Slemrod, 2005. "Estimating Tax Noncompliance with Evidence from Unaudited," Working Papers 0515, Ben-Gurion University of the Negev, Department of Economics.
    • Handle: RePEc:bgu:wpaper:0515
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    File URL: https://in.bgu.ac.il/en/humsos/Econ/Workingpapers/0515.pdf
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    Cited by:

    1. Pilar Rey del Castillo & Jaime Villanueva-Garcia, 2018. "Linking Tax Morale and Personal Income Tax in Spain," CESifo Working Paper Series 7218, CESifo.
    2. Jason M. DeBacker & Bradley T. Heim & Vasia Panousi & Shanthi Ramnath & Ivan Vidangos, 2012. "The properties of income risk in privately held businesses," Finance and Economics Discussion Series 2012-69, Board of Governors of the Federal Reserve System (U.S.).

    More about this item

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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