TY  - JOUR
AU  - Beron,Kurt J.
AU  - Tauchen,Helen V.
AU  - Witte,Ann Dryden
TI  - A Structural Equation Model for Tax Compliance and Auditing
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2556
PY  - 1988
Y2  - March 1988
UR  - http://www.nber.org/papers/w2556
L1  - http://www.nber.org/papers/w2556.pdf
N1  - Author contact info:
Ann Dryden Witte
500 SE Mizner Blvd., # A904
Boca Raton, FL 33432
Tel: 561 361 4398
E-Mail: awitte@wellesley.edu
AB  - In this paper. we estimate a three equation model for taxpayers' reported income and tax liability and for the probability of an audit. Our work differs from previous studies in that our dependent variables in the compliance equations are taxpayer reports rather than a variable related to auditor estimates of noncompliance and in that we estimate a structural equation for audits. We find that audits stimulate compliance although the effect is not large and is not statistically significant for all groups. Audits are more effective at inducing accurate reporting of subtractions from income than of income. Reduced-form results suggest that IRS activities other than audits have significant compliance effects. Results for the sociodemographic variables are interesting and help to explain some seemingly incongruous findings in the literature. We find compliance to be higher, if anything. in areas with less educated and older taxpayers, a large proportion of households headed by females. and a mostly native born population.
ER  -