Document Type
Article
Publication Date
2018
Publication Citation
2018 Brigham Young University Law Review 623
Abstract
Governments generally use enforcement methods, such as audits and the imposition of penalties, to deter noncompliance with tax laws. Although this approach is consistent with most economic modeling of tax compliance, some scholars caution that enforcement may backfire, “crowding out” taxpayers’ intrinsic motivations to pay taxes to such an extent that they reduce their tax payments. This article analyzes the existing evidence to determine if this occurs. In fact, field studies suggest that enforcement tools, such as audits, are effective deterrents, generally greatly increasing tax collections. A few recent studies have found that audits have a negative effect on the subsequent tax payments of those found compliant on audit. This outcome, while perhaps initially surprising, is consistent with the deterrence model: a favorable outcome after audit may lower the audited taxpayer’s perceived likelihood of subsequent audit and the perceived magnitude of the sanction.
Recommended Citation
Lederman, Leandra, "Does Enforcement Reduce Voluntary Tax Compliance?" (2018). Articles by Maurer Faculty. 2732.
https://www.repository.law.indiana.edu/facpub/2732