The Optimal Size of a Tax Collection Agency
This paper addresses the optimal degree of law enforcement regarding tax evasion. It derives the conditions that characterize the optimal size of a tax collection agency, and then provides a simple interpretation of the conditions in terms of excess burden.The paper clarified earlier findings that suggest that the optimal size should be set higher than a simple cost-benefit calculation would indicate. It concludes with a numerical example that illustrates the optimality condition and demonstrates that a policy based on a naive cost-benefit analysis of the tax collection agency could result in a substantial overcommitment of resources.
|Date of creation:||Oct 1985|
|Date of revision:|
|Publication status:||published as Slemrod, Joel and Shlomo Yitzhaki. "The Optimal Size of a Tax Collection Agency," Scandinavian Journal of Economics, vol.89, pp183-192, 1987W|
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- Joseph E. Stiglitz, 1981.
"Utilitarianism and Horizontal Equity: The Case for Random Taxation,"
NBER Working Papers
0694, National Bureau of Economic Research, Inc.
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- Weiss, Laurence, 1976. "The Desirability of Cheating Incentives and Randomness in the Optimal Income Tax," Journal of Political Economy, University of Chicago Press, vol. 84(6), pages 1343-52, December.
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