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Optimal tax administration

Author

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  • Keen, Michael
  • Slemrod, Joel

Abstract

This paper sets out a framework for analyzing optimal interventions by a tax administration, one that parallels and can be closely integrated with established frameworks for thinking about optimal tax policy. Its key contribution is the development of a summary measure of the impact of administrative interventions—the “enforcement elasticity of tax revenue”—that is a sufficient statistic for the behavioral response to such interventions, much as the elasticity of taxable income serves as a sufficient statistic for the response to tax rates. Among the applications are characterizations of the optimal balance between policy and administrative measures, and of the optimal compliance gap.

Suggested Citation

  • Keen, Michael & Slemrod, Joel, 2017. "Optimal tax administration," Journal of Public Economics, Elsevier, vol. 152(C), pages 133-142.
    • Handle: RePEc:eee:pubeco:v:152:y:2017:i:c:p:133-142
    DOI: 10.1016/j.jpubeco.2017.04.006
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    More about this item

    Keywords

    Tax administration; Tax compliance; Optimal taxation;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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