TY  - JOUR
AU  - Leonard,Herman B.
AU  - Zeckhauser,Richard J.
TI  - Amnesty, Enforcement and Tax Policy
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2096
PY  - 1986
Y2  - December 1986
UR  - http://www.nber.org/papers/w2096
L1  - http://www.nber.org/papers/w2096.pdf
N1  - Author contact info:
Herman B. Leonard

Richard J. Zeckhauser
John F. Kennedy School of Government
Harvard University
79 John F. Kennedy Street
Cambridge, MA  02138
Tel: 617/495-1174
Fax: 617/384-9340
E-Mail: richard_zeckhauser@harvard.edu
M1  - published as Herman B. Leonard, Richard J. Zeckhauser. "Amnesty, Enforcement, and Tax Policy," in Lawrence H. Summers, editor, "Tax Policy and the Economy, Volume 1" MIT Press (1987)

AB  - Amnesties are widely used in society to rehabilitate past sinners, to collect resources, such as library books, that would otherwise be unrecoverable, and to make enforcement easier by reducing the ranks of delinquents. Over the past four years, tax amnesties have emerged as a major instrument of state revenue policy. Twenty states conducted amnesties. Record collections were made by New York ($360 million) and Illinois (income tax amnesty dollars 3.4% of collections). Amnesties took in dollars that would probably have escaped otherwise, and tax rolls were bolstered. Tax amnesties also have costs, however. They may anger honest taxpayers, diminish the legitimacy of the tax system by pardoning past evasion, and decrease compliance by making future amnesties seem more likely. Shou1.d the federal government, aswirl in tax reform and suffering from an estimated $100 billion tax evasion problem, now offer an amnesty of its own? What type of federal program would most likely be offered? What would it be likely to accomplish? State tax amnesties have generally bean coupled with enhanced enforcement efforts, a feature intended to preserve the legitimacy of the tan system. The amnesty/enforcement combination twists the penalty schedule, lowering it non raising it later, in that way encouraging prompt payment. With no past sins to hide, future compliance also becomes less costly, hence more probable. Any federal amnesty, we predict, would be accompanied by a strengthening of enforcement. After reviewing the state experience, we speculatively estimate that a federal amnesty/enforcement to annual revenues on the order of $10 billion.
ER  -