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Optimal Tax Administration

Author

Listed:
  • Mr. Michael Keen
  • Mr. Joel Slemrod

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. Amongst the applications are characterizations of the optimal balance between policy and administrative measures, and of the optimal compliance gap.

Suggested Citation

  • Mr. Michael Keen & Mr. Joel Slemrod, 2017. "Optimal Tax Administration," IMF Working Papers 2017/008, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2017/008
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    WP; tax rate; taxable income; Tax administration; tax compliance; optimal taxation; enforcement elasticity; administration cost; cost-revenue ratio; marginal revenue-cost ratio; elasticity rule; implementation cost; IRS initiative; Personal income; Tax administration core functions; Tax gap; Compliance costs;
    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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