Tax Amnesties and Compliance in the Long Run: A Time Series Analysis

Abstract- This paper discusses time series methods that can be used to examine the long run effects of a tax amnesty, and ap-plies these methods to the 1985 Colorado amnesty. Several time series models are estimated: simple ordinary least squares time trend mode/s, univariate time series models, and multivariate intervention models. The empirical results from all models strongly indicate that the Colo-rado amnesty had no long run impact on either the level or the trend of tax collec-tions. This result suggests that a typical amnesty seems unlikely to generate sig-nificant new revenues, but also seems un-likely to compromise voluntary compli-ance