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Optimal tax administration

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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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    6. Joel Slemrod, 2001. "A General Model of the Behavioral Response to Taxation," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 8(2), pages 119-128, March.
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    25. Norman Gemmell & John Hasseldine, 2014. "Taxpayers' Behavioural Responses and Measures of Tax Compliance ‘Gaps’: A Critique and a New Measure," Fiscal Studies, Institute for Fiscal Studies, vol. 35, pages 275-296, September.
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    Cited by:

    1. James Alm, 2018. "What are the Costs of a New Tax Administration? The Case of a Personal Income Tax in Kuwait," Working Papers 1804, Tulane University, Department of Economics.
    2. repec:eee:pubeco:v:158:y:2018:i:c:p:180-193 is not listed on IDEAS
    3. Asatryan, Zareh & Peichl, Andreas, 2016. "Responses of firms to tax, administrative and accounting rules: Evidence from Armenia," ZEW Discussion Papers 16-065, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    4. Keen, Michael & Slemrod, Joel, 2017. "Optimal tax administration," Journal of Public Economics, Elsevier, vol. 152(C), pages 133-142.
    5. Michael Chirico & Robert Inman & Charles Loeffler & John MacDonald & Holger Sieg, 2017. "Deterring Tax Delinquency in Philadelphia," NBER Working Papers 23243, National Bureau of Economic Research, Inc.
    6. Bohne, Albrecht & Nimczik, Jan Sebastian, 2018. "Information Frictions and Learning Dynamics: Evidence from Tax Avoidance in Ecuador," IZA Discussion Papers 11536, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    Tax administration; Tax compliance; Optimal taxation;

    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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