Democratic Controls over Tax Enforcement

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One of the most striking political developments of the past century has been the expansion of government regulation and the consequent intrusion of "civil" enforcement agencies into most areas of social and economic life. The past three decades in particular has witnessed a dramatic growth in the scope of authority and size of government agencies that focus coercive enforcement activities on normal citizens, rather than on criminals and criminal activities. While studies of regulatory enforcement and administrative justice have also expanded rapidly, there is a considerable gap in our knowledge of civil enforcement and the behavior of non-policement enforcement agencies. In particular, the critical question addressed in this project is the extent to which the expanded coercive activities of enforcement agencies are controlled by democratic political institutions and principles. This project analyzes the extent to which the coercive enforcement powers of federal agencies are controlled by elected officials and democratic principles. The project expands the conceptual framework to include the democratic principles of efficiency and equality, which may constrain even controls exerted by elected officials over enforcement actions against citizens. The research team analyzes the responsiveness of Internal Revenue Service (IRS) enforcement activities to democratic controls. This will be accomplished through interviews with Financial and Examination officials in the IRS and political leaders and knowledgeable observers in Washington, New York and California. The researchers will develop three state-level data bases consisting of: IRS audit activities by audit class for 1960-1980; total individual and corporate audit activities for 1960-1990; and, IRS personnel for 1975-1990. They will use multiple indicators to probe the impact of presidential, congressional, gubernatorial, and state legislative officials on IRS audits and personnel. They will clarify the concepts, develop measures, and probe the impact of the democratic principles of efficiency and equality on IRS audits and personnel. Finally, they will compare enforcement production functions for effectiveness of audits in improving tax compliance over time, states, and audit classes. This research will provide an extensive analysis of IRS enforcement, focusing on the impact of political controls, democratic principles, organizationl constraints, and enforcement effectiveness in explaining the variance of enforcement across tates and taxpayer categories for the last three decades.