Preliminary Please Do Not Cite Political Alignment and Tax Evasion

We explore whether the decision to evade federal personal income taxes depends on the taxpayer’s level of approval of government. We first demonstrate using survey data the positive association between political alignment with the current president and the respondent’s trust in the administration and support for government taxation and spending. We then show using IRS tax return data and county-level fixed effects regressions that the larger the typical share of county residents who vote for the president’s party the smaller the tax gap across a variety of tax gap measures. Responses are concentrated in income components that are more likely to be invisible to the government, such as small business income. Our results provide realworld evidence that a positive outlook on government lowers tax evasion. * University of California, San Diego; U.S. Treasury, Office of Tax Analysis; Yale University E-mail addresses: jbcullen[at]ucsd.edu; Nicholas.Turner[at]Treasury.gov; ebonya.washington[at]yale.edu We thank Daniel Brownstead, Stephanie Hao and Claudio Labanca for excellent research assistance, and Jeffrey Clemens, Danny Yagan and participants in the Austin-Bergen Labor Conference and All California Labor Economics Conference for helpful comments. All errors are our own. This research represents our private research efforts and does not necessarily reflect the views or opinions of the U.S. Treasury.