CONTROLLING THE IRS - PRINCIPALS, PRINCIPLES, AND PUBLIC-ADMINISTRATION

Theory: The behavior of government agencies reflects democratic princi ples of equal treatment and efficiency as well as the more-studied pri nciple of responsiveness to elected political principals. Hypothesis: The variance in IRS enforcement actions against individual and corpora te taxpayers across states and time can be explained by measures refle cting equal treatment of taxpayers, enforcement efficiency, and respon siveness to elected officials. Methods: We test the hypothesis using r egression analysis of a pooled time-series of state-level audits of co rporate and individual tax returns for the period of 1974-92. Results: The odds of corporate versus individual audits increase with increase d Democratic control over Congress and change with different president ial administrations, but not with changes in state-level partisanship. The odds also respond significantly to changes in the composition of the taxpaying district and revenue base, suggesting IRS responsiveness to equity and efficiency.