NBER Working Paper by Guyton, Langetieg, Reck, Risch & Zucman
This paper, co-authored by III Faculty Associate Dr Daniel Reck, studies tax evasion at the top of the US income distribution using IRS micro-data. The authors empirically demonstrate that random audits underestimate tax evasion at the top of the income distribution.
The paper finds that unreported income as a fraction of true income rises from 7% in the bottom 50% to more than 20% in the top 1%, of which 6 percentage points correspond to undetected sophisticated evasion. Accounting for tax evasion increases the top 1% fiscal income share significantly.
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