Tax Avoidance, Evasion, and Administration

Joel Slemrod, Shlomo Yitzhaki

NBER Working Paper No. 7473
Issued in January 2000
NBER Program(s):   PE

When tax structure changes, people may alter their consumption basket, but they also may call and give new instructions to their accountant, change their reports to the IRS, change the timing of transactions, and undertake a range of other actions that do not directly involve a change in their consumption basket. This survey argues that acknowledging the variety of behavioral responses to taxation changes the answers to traditional subjects of inquiry such an incidence, optimal progressivity, and optimal tax structure, and also raises a whole new set of policy questions, such as the appropriate level of resources to devote to administration and enforcement, and how these resources should be deployed. For some purposes, such as estimating the marginal cost of funds, and subject to some qualifications, the nature of the behavioral response does not matter, and only the total magnitude of response does. However, with respect to real behavioral responses such as labor supply, it is natural to presume that the response is an immutable function of preferences. With respect to avoidance and evasion, though, this is not appropriate because there are a variety of policy instruments that can affect the magnitude of responses, implying that the elasticity of response is itself a policy instrument.

download in pdf format
   (424 K)

email paper

This paper is available as PDF (424 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w7473

Published: Slemrod, Joel & Yitzhaki, Shlomo, 2002. "Tax avoidance, evasion, and administration," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 22, pages 1423-1470 Elsevier.

Users who downloaded this paper also downloaded these:
Engel and Hines w6903 Understanding Tax Evasion Dynamics
Horioka, Fujisaki, Watanabe, and Kouno w7463 Are Americans More Altruistic than the Japanese? A U.S.-Japan Comparison of Saving and Bequest Motives
Alesina, Danninger, and Rostagno w7387 Redistribution Through Public Employment: The Case of Italy
Ke, Petroni, and Shackelford w7453 The Impact of State Taxes on Self-Insurance
Shackelford and Verrecchia w7451 Intertemporal Tax Discontinuities
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us