Auditing Apartheid: Why Are Black Taxpayers Audited More? (Elzayn et al., 2024)

Welcome to Revise and Resubmit, the podcast where we unpack research shaping the world around us. Today, we dive into a timely and critical paper published in The Quarterly Journal of Economics, one of the prestigious FT50 journals. This episode, based on the research titled Measuring and Mitigating Racial Disparities in Tax Audits, is authored by Hadi Elzayn, Evelyn Smith, Thomas Hertz, Cameron Guage, Arun Ramesh, Robin Fisher, Daniel E. Ho, and Jacob Goldin. This research exposes a troubling pattern within the U.S. tax system. Despite policies that aim to be race-blind, Black taxpayers are audited at nearly three to five times the rate of their non-Black counterparts. Surprisingly, this disparity isn’t about catching more fraud—it’s tied to the way audits prioritize certain refundable credits, like the Earned Income Tax Credit (EITC). Using innovative algorithms, the authors show that by adjusting audit strategies to target broader tax noncompliance, not only could the racial audit gap shrink, but the system would also uncover more meaningful errors—like misreported business income. We thank the authors and Oxford Academic for bringing this essential research to light. Now here’s the question: If technology can expose hidden biases in tax audits, can it also offer a blueprint for building fairer public policies? Reference Hadi Elzayn, Evelyn Smith, Thomas Hertz, Cameron Guage, Arun Ramesh, Robin Fisher, Daniel E Ho, Jacob Goldin, Measuring and Mitigating Racial Disparities in Tax Audits, The Quarterly Journal of Economics, 2024. https://doi.org/10.1093/qje/qjae027