TY  - JOUR
AU  - Blumenthal,Marsha
AU  - Christian,Charles
AU  - Slemrod,Joel
TI  - The Determinants of Income Tax Compliance: Evidence from a Controlled Experiment in Minnesota
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6575
PY  - 1998
Y2  - May 1998
UR  - http://www.nber.org/papers/w6575
L1  - http://www.nber.org/papers/w6575.pdf
N1  - Author contact info:
Charles Christian
E-Mail: charles.christian@asu.edu

Joel Slemrod
University of Michigan Business School
701 Tappan Street
Room R5396
Ann Arbor, MI  48109-1234
Tel: 734/936-3914
Fax: 734-615-4323
E-Mail: jslemrod@umich.edu
AB  - This paper reports on the results of a controlled experiment in Minnesota in which a random sample of taxpayers was informed that their income tax returns would certainly be closely examined.  We analyze reported income of this sample of taxpayers, reported income on their previous year's returns, and reported income from the two corresponding years' returns of a control group of taxpayers that did not receive the letter. We find that the treatment effect varies depending on the level of income.  Low and middle income taxpayers increased reported income and tax liability relative to the control group, which we interpret as indicating the presence of noncompliance. The effect was much stronger for those with more  opportunity' to evade, as measured by their source of income.  However, the reported income of the high-income treatment group fell sharply relative to the control group.  We suggest a model based on tax audits as a negotiation that can explain this apparently perverse result.
ER  -