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The Distribution of Income Tax Noncompliance

Johns, Andrew and Slemrod, Joel

Abstract:

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 find that, when taxpayers are arrayed by their estimated "true" income, defined as reported income adjusted for underreporting, the ratio of aggregate misreported income to true income generally increases with income, although it peaks among taxpayers with adjusted gross income in the 99.0 to 99.5 percentile. In sharp contrast, the ratio of underreported tax to true tax is highest for lower-income taxpayers.

Citation

Johns, Andrew and Slemrod, Joel (2010), The Distribution of Income Tax Noncompliance, National Tax Journal, 63:3, pp. 397-418

DOI: dx.doi.org/10.17310/ntj.2010.3.01