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The Enforcement of Income Tax Laws: Efficiency Implications

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  • J. C. BALDRY

Abstract

Complete enforcement of income tax laws, designed to reduce income tax evasion to zero, is shown to be inefficient. Starting from a ‘full compliance’ policy, it is shown that a marginal reduction in enforcement will always allow for tax reductions, hence increases in the ex‐ante utility levels of taxpayers. Only if the tax structure is rigid can full compliance be optimal.

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  • J. C. Baldry, 1984. "The Enforcement of Income Tax Laws: Efficiency Implications," The Economic Record, The Economic Society of Australia, vol. 60(2), pages 156-159, June.
    • Handle: RePEc:bla:ecorec:v:60:y:1984:i:2:p:156-159
    DOI: 10.1111/j.1475-4932.1984.tb00848.x
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    References listed on IDEAS

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    1. Fishburn, Geoffrey, 1979. "On How to Keep Tax Payers Honest (or Almost So)," The Economic Record, The Economic Society of Australia, vol. 55(150), pages 267-270, September.
    2. Geoffrey Fishburn, 1979. "On How to Keep Tax Payers Honest (or almost so)," The Economic Record, The Economic Society of Australia, vol. 55(3), pages 267-270, September.
    3. Singh, Balbir, 1973. "Making honesty the best policy," Journal of Public Economics, Elsevier, vol. 2(3), pages 257-263, July.
    4. Allingham, Michael G. & Sandmo, Agnar, 1972. "Income tax evasion: a theoretical analysis," Journal of Public Economics, Elsevier, vol. 1(3-4), pages 323-338, November.
    5. Kolm, Serge-Christophe, 1973. "A note on optimum tax evasion," Journal of Public Economics, Elsevier, vol. 2(3), pages 265-270, July.
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    Cited by:

    1. Kopczuk, Wojciech, 2001. "Redistribution when avoidance behavior is heterogeneous," Journal of Public Economics, Elsevier, vol. 81(1), pages 51-71, July.
    2. Slemrod, Joel & Yitzhaki, Shlomo, 2002. "Tax avoidance, evasion, and administration," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 22, pages 1423-1470, Elsevier.
    3. Dimitrios Varvarigos, 2017. "Cultural norms, the persistence of tax evasion, and economic growth," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 63(4), pages 961-995, April.
    4. Kalina Koleva, 2005. "Seeking for an optimal tax administration: the efficiency costs’ approach [A la recherche de l'administration fiscale optimale : l'approche par les coûts d'efficience]," Post-Print halshs-00195354, HAL.
    5. Sokolovskyi, Dmytro & Sokolovska, Olena, 2016. "Tax burden optimization on economic agents by modeling interaction in the taxation system," MPRA Paper 71110, University Library of Munich, Germany, revised 05 May 2016.
    6. Kalina Koleva, 2005. "A la recherche de l'administration fiscale optimale : l'approche par les coûts d'efficience," Cahiers de la Maison des Sciences Economiques r05050, Université Panthéon-Sorbonne (Paris 1).
    7. Sokolovskyi, Dmytro, 2018. "Game-theoretic model of tax evasion: analysis of agents’ interaction and optimization of tax burden," MPRA Paper 86415, University Library of Munich, Germany.
    8. Cullis, John & Jones, Philip & Savoia, Antonio, 2012. "Social norms and tax compliance: Framing the decision to pay tax," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(2), pages 159-168.

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