Abstract
The purpose of this Chapter is to estimate the marginal effect of criminal investigations (CI) conducted by the IRS. Specifically, I answer these questions:
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Notes
- 1.
The results show that absolute changes in audits or sentences lead to smaller marginal changes in revenue than percentage changes. Absolute changes are constant across states, whereas the percentage changes vary according to state size (i.e., California will have large changes and Rhode Island will have small changes). This difference is important when we extrapolate to form totals for the U.S. as a whole. When we simulate with absolute changes, big states have relatively smaller changes. Extrapolating by population, small changes are more heavily weighted in large states, and the overall effect is consequently lowered.
- 2.
Plumley, Alan H. “The Determinants of Individual Income Tax Compliance: Estimating the Impacts of Tax Policy, Enforcement, and IRS Responsiveness.” Internal Revenue Service, Publication 1916 (Rev. 11-96), 1996.
- 3.
This type of time-series analysis can sometimes be used to untangle marginal and average costs over time.
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Dubin, J.A. (2012). IRS Criminal Investigation: Measuring the Marginal Monetary Effect of Criminal Investigation Convictions. In: The Causes and Consequences of Income Tax Noncompliance. Springer, New York, NY. https://doi.org/10.1007/978-1-4419-0907-7_8
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DOI: https://doi.org/10.1007/978-1-4419-0907-7_8
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