TaxProf Blog

Christopher J. Waller (University of Notre Dame, Department of Economics) has posted Dynamic Taxation, Private Information and Money on SSRN.  Here is the abstract:

The objective of this paper is to study optimal fiscal and monetary policy in a dynamic Mirrlees model where the frictions giving rise to money as a medium of exchange are explicitly modeled. The framework is a three period OLG model where agents are born every other period. The young and old trade in perfectly competitive centralized markets. In middle age, agents receive preference shocks and trade amongst them- selves in an anonymous manner. Since preference shocks are private information, in a record-keeping economy, the planner’s constrained allocation trades off efficient risk sharing against production efficiency in the search market. In the absence of record-keeping, the government uses flat money as a substitute for dynamic contracts to induce truthful revelation of preferences. Inflation affects agents’ incentive constraints and so distortionary taxation of money may be needed as part of the optimal policy even if lump-sum taxes are available.

Sagit Leviner (Ono Academic College, Israel) & Kyle Richison (IRS Office of Research, Analysis, and Statistics) have posted The Role Paid Preparers Play in Taxpayer Compliance in the United States: An Empirical Investigation with Policy Implications on SSRN.  Here is the abstract:

This paper underscores the growing need to shed better light on paid preparers and their effect on the tax system and its administration. The paper undertakes an empirical analysis of U.S. individual tax returns based on (1) tax return characteristics (by line item and type of return), and (2) preparation mode (self or paid prepared return; if paid – whether by lawyer, CPA, enrolled agent or other) as the independent variables. The dependent variable applied is the compliance or noncompliance of these returns. In a second stage of the analysis where noncompliance is found, a taxonomy of the errors identified will be explored to examine whether certain types of errors are associated with the independent factors. By offering a taxonomy of errors and forming a web of associations between these errors and the independent variables, the paper seeks to explore both the motivations behind and facilitators of tax noncompliance as well as the strategies to curb them so as to more effectively foster taxpayer compliance. The analysis draws from 3,457 returns where the taxpayer claimed an Earned Income Tax Credit (EITC) for Tax Year 1999. These returns have all been subject to either face-to-face or correspondence audit and provide a uniquely thorough pool of raw data that is presently unavailable for the general population.