America’s unreported economy: measuring the size, growth and determinants of income tax evasion in the U.S.

Abstract This study empirically investigates the extent of noncompliance with the tax code and examines the determinants of federal income tax evasion in the U.S. Employing a refined version of Feige’s (1986; 1989) General Currency Ratio (GCR) model to estimate a time series of unreported income as our measure of tax evasion, we find that 18-23 % of total reportable income may not properly be reported to the IRS. This gives rise to a 2009 “tax gap” in the range of $390-$537 billion. As regards the determinants of tax noncompliance, we find that federal income tax evasion is an increasing function of the average effective federal income tax rate, the unemployment rate, the nominal interest rate, and per capita real GDP, and a decreasing function of the IRS audit rate. Despite important refinements of the traditional currency ratio approach for estimating the aggregate size and growth of unreported economies, we conclude that the sensitivity of the results to different benchmarks, imperfect data sources and alternative specifying assumptions precludes obtaining results of sufficient accuracy and reliability to serve as effective policy guides.Unreported economy; Underground economy; tax evasion; tax gap; noncompliance; income tax evasion; currency demand approach, currency ratio models

Expected Benefits of Voting and Voter Turnout

This empirical study seeks to identify key aggregate-level economic and non-economic determinants of the expected benefits from voting and hence aggregate voter turnout. A unique dimension of this study is the hypothesis that PAC (political action committee) election campaign contributions, e.g., to U.S. Senate races, may reduce the expected benefits of voting and hence voter turnout because the greater the growth of real PAC contributions, the greater the extent to which eligible voters may become concerned that these contributions lead to PAC political influence over elected officials. Indeed, this study finds for the period 1960-2000 that the voter participation rate has been negatively impacted by the growth in real PAC contributions to Senate election campaigns. Another interesting finding is that voter turnout is directly/positively related to strong public approval or strong public disapproval of the incumbent President. This study also finds that the voter participation rate has been positively impacted by the opportunity to vote in Presidential elections, the Vietnam War, a “too slowly” growing real GDP, and inflation rates when they exceed five percent per annum. Furthermore, this study also finds the voter participation rate to have been negatively impacted by the public’s general dissatisfaction with government.

The impact of undocumented immigration on ID theft in the United States: An empirical study

According to the U.S. Federal Trade Commission, identity theft constituted the number one consumer complaint in the United States in 2006. Using state-level data for the 50 states for 2005, we find, among other things, that the rate of reported identity theft per 100,000 population is directly related to the unemployment rate, the percent of the population residing in urban areas, and the extent of undocumented immigration. Of these variables, the undocumented immigration variable is by far the most important in terms of both weight and statistical significance

Nimbus 7 Solar Backscatter Ultraviolet (SBUV) spectral scan solar irradiance and Earth radiance product user's guide

The archived tape products from the spectral scan mode measurements of solar irradiance (SUNC tapes) and Earth radiance (EARTH tapes) by the Solar Backscatter UV (SBUV) instrument aboard Nimbus 7 are described. Incoming radiation from 160 to 400 nm is measured at intervals of 0.2 nm. The scan-to-scan repeatability of the solar irradiance measurements ranges from approximately 0.5 to 1 percent longward of 280 nm, to 2 percent around 210 nm and 4 percent near 175 nm. The repeatability of the Earth radiance values ranges from 2 to 3 percent at longer wavelengths and low zenith angles to 10 percent at shorter wavelengths and high zenith angles. The tape formats are described in detail, including file structure and contents of each type of record. Catalogs of the tapes and the time period covered are provided, along with lists of the days lacking solar irradiance measurements and the days dedicated to Earth radiance measurements. The method for production of the tapes is outlined and quality control measures are described. How radiances and irradiances are derived from the raw counts, the corrections for changes in instrument sensitivity, and related uncertainties are discussed

Solar UV Variations During the Decline of Cycle 23

Characterization of temporal and spectral variations in solar ultraviolet irradiance over a solar cycle is essential for understanding the forcing of Earth's atmosphere and climate. Satellite measurements of solar UV variability for solar cycles 21, 22, and 23 show consistent solar cycle irradiance changes at key wavelengths (e.g. 205 nm, 250 nm) within instrumental uncertainties. All historical data sets also show the same relative spectral dependence for both short-term (rotational) and long-term (solar cycle) variations. Empirical solar irradiance models also produce long-term solar UV variations that agree well with observational data. Recent UV irradiance data from the Solar Radiation and Climate Experiment (SORCE) Spectral Irradiance Monitor (SIM) and Solar Stellar Irradiance Comparison Experiment (SOLSTICE) instruments covering the declining phase of Cycle 23 present a different picture oflong-term solar variations from previous results. Time series of SIM and SOLSTICE spectral irradiance data between 2003 and 2007 show solar variations that greatly exceed both previous measurements and predicted irradiance changes over this period, and the spectral dependence of the SIM and SOLSTICE variations during these years do not show features expected from solar physics theory. The use of SORCE irradiance variations in atmospheric models yields substantially different middle atmosphere ozone responses in both magnitude and vertical structure. However, short-term solar variability derived from SIM and SOLSTICE UV irradiance data is consistent with concurrent solar UV measurements from other instruments, as well as previous results, suggesting no change in solar physics. Our analysis of short-term solar variability is much less sensitive to residual instrument response changes than the observations of long-term variations. The SORCE long-term UV results can be explained by under-correction of instrument response changes during the first few years of measurements, rather than requiring an unexpected change in the physical behavior of the Sun

Nimbus 7 solar backscatter ultraviolet (SBUV) ozone products user's guide

Three ozone tape products from the Solar Backscatter Ultraviolet (SBUV) experiment aboard Nimbus 7 were archived at the National Space Science Data Center. The experiment measures the fraction of incoming radiation backscattered by the Earth's atmosphere at 12 wavelengths. In-flight measurements were used to monitor changes in the instrument sensitivity. Total column ozone is derived by comparing the measurements with calculations of what would be measured for different total ozone amounts. The altitude distribution is retrieved using an optimum statistical technique for the inversion. The estimated initial error in the absolute scale for total ozone is 2 percent, with a 3 percent drift over 8 years. The profile error depends on latitude and height, smallest at 3 to 10 mbar; the drift increases with increasing altitude. Three tape products are described. The High Density SBUV (HDSBUV) tape contains the final derived products - the total ozone and the vertical ozone profile - as well as much detailed diagnostic information generated during the retrieval process. The Compressed Ozone (CPOZ) tape contains only that subset of HDSBUV information, including total ozone and ozone profiles, considered most useful for scientific studies. The Zonal Means Tape (ZMT) contains daily, weekly, monthly and quarterly averages of the derived quantities over 10 deg latitude zones

Post-Great-Recession Human Migration Patterns in the U.S.: The Overlooked Impacts of Entrepreneurial Activity and Personal Freedom

Effectively no scholarly research has been published in peer-reviewed journals on the potential migration impacts of environments that are more conducive to entrepreneurship. Similarly, the potential migration impact of personal freedom also is essentially ignored in the literature. This study seeks to add to the literature by investigating the impacts of both entrepreneurial activity and personal freedom on state in-migration patterns. Using a panel dataset for the post-Great Recession period 2010-2017, the empirical analysis reveals that all three of the Kauffman indices of entrepreneurial activity are found to exercise a positive and statistically significant impact on both net in-migration and gross in-migration. In addition, the index of overall personal freedom is found to exercise a positive and statistically significant impact on both of these in-migration measures. Thus, it appears that there may be good reason for future migration studies to take such variables into account when seeking to explain, understand, and predict migration patterns in the U.S

The Relative Tax Gap Hypothesis: An Exploratory Analysis and Application to U.S. Financial Markets

This study empirically investigates the “relative tax gap hypothesis,” which posits that the greater the size of the relative tax gap, the greater the degree to which the U.S. Treasury must borrow from domestic and/or other credit markets and hence the higher the ex ante real interest rate yield on the Bellwether 30 year U.S. Treasury bond. The study uses the most current data available for computing what is referred to here as the “relative tax gap,” which is the ratio of the aggregate tax gap (the loss in federal income tax revenue resulting from personal income tax evasion) to the GDP level. For each year of the study period, the nominal value of the tax gap is scaled by the nominal GDP level and expressed as a percentage. The study period runs from 1982 through 2016, reflecting data availability for all of the variables. The estimation results provide strong support for the hypothesis. In addition, in separate estimations, evidence is provided that the relative tax gap also acts to elevate the ex ante real interest rate yield on Moody’s Baa-rated long-term corporate bonds. It logically follows, then, that to the extent that a greater relative tax gap leads to higher ex ante real interest rates, it may contribute to the crowding out of corporate investment in new plant equipment associated heretofore with government budget deficits per se

An Empirical Analysis of the Effects of Budget Deficits (Total and Primary) and Personal Income Tax Rates on the Ex Post Real Interest Rate Yield on Long-Term U.S. Treasury Bonds

This empirical study adopts an open-economy loanable funds model to investigate the impact of post-Bretton Woods U.S. federal government budget deficits and personal income tax rates on the ex post real interest rate yield on thirty-year Treasury bonds. In this study, the budget deficit is measured in two different ways, the total (“unified”) budget deficit and the primary deficit (the total/unified deficit minus net interest payments). Two different estimation techniques, autoregressive two stage least squares estimation and the ARCH (Autoregressive Conditional Heteroscedasticity) Method, for the 1973-2016 study period provide evidence that the ex post real interest rate yield on thirty-year Treasury bonds has been an increasing function of both federal budget deficit measures (expressed as a percent of GDP) and the maximum marginal federal personal income tax rate. The estimations all imply that elevating either the total/unified or primary federal budget deficit appears to raise the cost of borrowing in the U.S., whereas reducing the maximum marginal personal income tax rate appears to reduce the cost of borrowing. Given the potential effects of longer-term real interest rates on investment in new plant and equipment and overall economic growth, policy-makers should not overlook these findings

Where Has The Currency Gone? And Why? The Underground Economy And Personal Income Tax Evasion In The U.S., 1970-2008

Unaccounted for currency in the U.S. is argued to reflect the presence of widespread income tax evasion. This empirical study seeks to identify determinants of the underground economy in the U.S. in the form of federal personal income tax evasion over the period 1970-2008. In this study, we use the most recent data available on personal income tax evasion, data that are derived from the General Currency Ratio Model and measured in the form of the ratio of unreported AGI (adjusted gross income) to reported AGI. Other studies of federal income tax evasion for the U.S. are dated and do not use data this current. It is found that personal income tax evasion was an increasing function of the maximum marginal federal personal income tax rate, the percentage of federal personal income tax returns characterized by itemized deductions, and unpopular military engagements, in this case, the War in Iraq, and a decreasing function of the Tax Reform Act of 1986 (during its first two years of being implemented), the ratio of the tax free interest rate yield on high grade municipals to the interest rate yield on ten year Treasury notes (as a measure of the incentive effect of a better return to tax avoidance, which is legal), and higher audit rates of filed federal income tax returns (as a measure of risk from tax evasion) by IRS personnel