NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

How Tax Complexity and Enforcement Affect the Equity and Efficiency of The Income Tax

Louis Kaplow

NBER Working Paper No. 5391 (Also Reprint No. r2053)
Issued in December 1995
NBER Program(s):   PE

Much criticism of the income tax involves administration: the enormous complexity of the system is responsible for large compliance costs, public and private, and the tax gap is large despite substantial resources devoted to enforcement. The desire for simplification and improved compliance motivates various incremental reforms as well as proposals for fundamental restructuring of the tax system. But evaluation of such changes is difficult because the underlying problems have not been analyzed in terms of the equity and efficiency concerns that animate more familiar assessments of income tax policy. This article provides a framework for a unified analysis, in which the same factors that are used to justify the choice of the tax base and the rate structure are employed to resolve problems involving complexity, compliance costs, and enforcement difficulties.

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Document Object Identifier (DOI): 10.3386/w5391

Published: National Tax Journal, vol. 49, pp. 135-150, (1996).

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