Thursday, October 25, 2012
James Alm (Tulane University, Department of Economics) presents Socio-Economic Diversity, Social Capital, and Tax Filing Compliance in the United States at Columbia today as part of its Tax Policy Colloquium Series hosted by Alex Raskolnikov, David Schizer and Wojciech Kopczuk:
In this paper we present a rare empirical study of the determinants of tax filing compliance in the United States. We use county level data for the tax year 2000 and a panel of county and state level data for the tax years 2000 to 2006. We include explanatory variables identified in the rational compliance framework, including an enforcement index against identified non-filers, the audit rate of filers, and the average penalty rate for both filers and nonfilers. We also examine the role of social capital on tax compliance. In particular, we test whether heterogeneity in household income, language, race, or religion can explain variation in filing rates. We find that non-filing rates tend to fall in the enforcement index in 2000 cross section analysis, but instead rise in the audit rate of filers in panel analysis. Non-filing rates also fall in the share of a county’s population that is married or residentially stable, and rise in the share of county income from self-employment or public assistance and in the share of owneroccupied housing. Regarding social capital, non-filing looks to be increasing in heterogeneity by race, though not income or language. Non-filing may also be decreasing in heterogeneity by religious membership, though we have only cross-section evidence.