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The Political Economy of the IRS
Author(s) -
Young Marilyn,
Reksulak Michael,
Shughart William F.
Publication year - 2001
Publication title -
economics and politics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.822
H-Index - 45
eISSN - 1468-0343
pISSN - 0954-1985
DOI - 10.1111/1468-0343.00090
Subject(s) - bureaucracy , agency (philosophy) , politics , audit , representation (politics) , government (linguistics) , principal–agent problem , principal (computer security) , revenue , accounting , business , welfare , divided government , political science , public administration , economics , finance , law , sociology , computer security , social science , linguistics , philosophy , corporate governance , computer science
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.