The Political Economy of the IRS

Authors: Young, Marilyn; Reksulak, Michael; Shughart, William F.

Source: Economics and Politics, Volume 13, Number 2, July 2001 , pp. 201-220(20)

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Abstract:

This paper tests a multiple principal-agent model of the Internal Revenue Service. Using data for 33 IRS districts over six tax years, 1992-1997, we report evidence that the fraction of individual income tax returns audited is significantly lower in districts that are important to the president electorally and that have representation on key congressional committees. These findings suggest that the IRS is not a rogue government agency, but rather is an effective bureaucratic agent of its political sponsors. “Reforming” the IRS by subjecting it to an independent oversight board appointed by the president would therefore seem to be redundant.

Document Type: Original article

DOI: http://dx.doi.org/10.1111/1468-0343.00090

Affiliations: 1: ,

Publication date: 2001-07-01