Optimal Tax Administration
NBER Working Paper No. 22408
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. At its heart is 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.
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Document Object Identifier (DOI): 10.3386/w22408
Published: Michael Keen & Joel Slemrod, 2017. "Optimal Tax Administration," IMF Working Papers, vol 17(8).
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