This paper uses newly available data from the IRS to assess the distributional consequences of U.S. federal income tax noncompliance for the tax year 2001. We fi nd that, when taxpayers are arrayed by their estimated “true” income, defi ned as reported income adjusted for underreporting, the ratio of aggregate misreported income to true income generally increases with income, although it peaks ...

We exploit an exhaustive administrative dataset that includes the individual tax returns of all households in the top percentile of the income distribution in Germany to pin down the effective income taxation of households with very high incomes. Taking tax base erosion into account, we find that the top percentile of the income distribution pays an effective average tax rate of 30.5 percent an...

Taxpayers shelter income from taxation both through illegal evasion and legal avoidance. This tax sheltering creates a difference between a household’s actual income and what it reports to the tax authorities. While tax sheltering is a central concern for designing a tax system, the private nature of this behavior complicates evaluating the magnitude and determinants of such behavior. In this p...

A clear income gradient exists for the sport and physical activity (PA) participation of Canadian children. Governments in Canada recently introduced tax credits to alleviate the financial burden associated with registering a child in organized physical activity (including sport). The majority of these credits, including the Children's Fitness Tax Credit, are non-refundable (i.e., reduces the a...

At first glance, the elimination of the corporate tax on business seems an obvious method of attracting new firms to the state and promoting the expansion of existing firms. And in fact, states and localities have been offering tax incentives, usually in the form of reduced property taxes or corporate income tax credits, to firms for many years. Under current law, Georgia imposes a 6 percent ta...

We study experimentally how taxpayers choose between two tax regimes to fund a public good. The first-best tax regime imposes a general, distortion-free income tax. However, this tax cannot be enforced. The second-best alternative supplements the income tax by a specific commodity tax. This tax cannot be evaded but distorts optimal consumption choices, instead. The result is that a large majori...

A fundamental property of a progressive income tax is that it provides implicit collective insurance against idiosyncratic shocks to income by dampening the variability of disposable income and consumption. The Economic Recovery Tax Act of 1981 (ERTA) and the Tax Reform Act of 1986 (TRA86) greatly reduced the number of marginal tax brackets and the maximum marginal rate, which limits the abilit...

This paper uses a finite mixture model to uncover heterogeneous income tax rate perceptions, establishing four new results. First, almost half of respondents do not distinguish between marginal and average tax rates. Second, roughly 30 percent of respondents know the statutory marginal tax rates schedule (and answer questions accordingly). Third, among respondents who think all income is taxed ...

Proposals to substantially reduce or eliminate the state income tax and replace the lost revenue through a higher sales tax rate, an expanded sales tax base, or some combination of the two, are being considered in a dozen states, specifically Georgia, Hawaii, Idaho, Kansas, Louisiana, Missouri, Nebraska, New Jersey, Ohio, Oklahoma, Oregon and South Carolina (Hamilton 2012). While no state has f...