The Internal Revenue Service (IRS) audits tax returns to make sure that the tax paid is reasonable for the amount of income. The following three plots display the amount of taxes paid versus the...


The Internal Revenue Service (IRS) audits tax returns to make sure that the tax paid is reasonable for the amount of income. The following three plots display the amount of taxes paid versus the reported total income (both in thousands of dollars) for 45 taxpayers with incomes between $100,000 and $200,000. One plot shows the actual (income, tax) pairs; the other two scramble the pairs.


a. Does the IRS need for total income to be associated with the taxes paid if such data are to help it identify tax cheats?1


b. Are the taxes paid associated with the total income?2



May 04, 2022
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