Discusses when Connecticut last offered a tax amnesty, how much revenue that amnesty brought in, which other states have had amnesties, and, how much revenue those amnesties generated.
Discusses when Connecticut last offered a tax amnesty, how much revenue that amnesty brought in, which other states have had amnesties, and, how much revenue those amnesties generated.
This paper revisits earlier studies on the determinants of tax amnesties. The novel findings are (i) amnesties are more likely to be declared during fiscal stress periods, and (ii) political factors significantly affect the introduction and timing of amnesties. In particular, the paper empirically disentangles opposite theoretical effects to show that governors perceive amnesties as another revenue source (rather than a tax increase alternative). Finally, supporting evidence shows that by breaking horizontal equity, amnesties might be perceived as unfair: a significant correlation exists between governors who lost their reelection bids and the introduction of a tax amnesty during their election years.
They could therefore blame the governor as being incompetent and not reelect
him/her. In the case where an amnesty is unsuccessful, then the governor's
reputation could also be tarnished by having introduced an unsuccessful
program. On the other hand, a positive and significant effect would arise if
governors think of tax amnesties and tax increases as substitutes. A tax amnesty
program is not a new tax but an administrative scheme to collect past taxes. With
tax increases ahead of ...
The controversial assumption that underlies tax amnesties is that, at least in some situations, it is preferable to sacrifice the penalties for past non-compliance (and perhaps even the tax owing itself) in exchange for improved compliance in the future. Some commentators argue that tax amnesties actually undermine future compliance, because some taxpayers may be encouraged to engage in non-compliance in anticipation of future tax amnesty. Consequently, tax amnesties must be designed and implemented cautiously from a public policy perspective. The scope of this highly relevant book is impressive. It covers the experience with tax amnesties of a variety of countries, deals with the constitutionality, morality, and economic effects of tax amnesties, and discusses the compatibility of tax amnesties with international agreements, in particular, the Treaty of the European Community. As the renowned international tax expert Brian Arnold L71observes in the work s foreword: The book is an important contribution to the literature on tax amnesties, as there is no comparable source dealing with the topic . . . It is timely because the elimination of bank secrecy and the proliferation of Tax Information Exchange Agreements with tax havens have led several countries to adopt tax amnesty programs."
Consequently, tax amnesties must be designed and implemented cautiously from a public policy perspective. The scope of this highly relevant book is impressive.
Tax amnesties remain as popular as ever as a tool for raising revenue and increasing tax compliance. International experience, however, shows that the costs of tax amnesty programs often exceed the programs’ benefits. This paper weighs the advantages and disadvantages of tax amnesties, drawing on results from the theoretical literature, econometric evidence, and selected country and U.S. state case studies. The authors conclude that “successful” tax amnesties are the exception rather than the norm. Improvements in tax administration are the essential ingredient in addressing the main problems that tax amnesties seek to address. Indeed, the most successful amnesty programs rely on improving the tax administration’s enforcement capacity. ?Given the potential drawbacks of tax amnesties, a few alternative measures are discussed.
In this section we analyze the recent trends in tax amnesties, and some evidence
is provided regarding their revenue and compliance effects. The first section is
devoted to a review of the econometric literature on the (mainly revenue) effect of
tax amnesties. The second section describes the U.S. states' experience with
amnesties (through a general overview and then two case studies: the tax
amnesty programs of Kentucky and Michigan, both in 2002). The experience of
the U.S. ...
