This paper presents a theoretical model and empirical evidence to explain the occurrence of tax amnesties. We treat amnesties
as endogenous, resulting from a strategic game between many tax payers discounting future payments from punishment and a government
that trades off costs and benefits of amnesty programmes. From the model we derive hypotheses about the factors that should
influence the occurrence of tax amnesties. For our empirical test we rely on amnesty information from US states between 1981
and 2011. In line with the theoretical model, our empirical findings suggest that the likelihood of amnesties is mainly driven
by a government's fiscal requirements and the taxpayers' expectations on future amnesties.
Keywords:US states, strategic game, tax amnesties
Research group:Regional Economics and Spatial Analysis