TY  - JOUR
AU  - Slemrod,Joel
AU  - Yitzhaki,Shlomo
TI  - Tax Avoidance, Evasion, and Administration
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7473
PY  - 2000
Y2  - January 2000
UR  - http://www.nber.org/papers/w7473
L1  - http://www.nber.org/papers/w7473.pdf
N1  - Author contact info:
Joel Slemrod
University of Michigan Business School
701 Tappan Street
Room R5396
Ann Arbor, MI  48109-1234
Tel: 734/936-3914
Fax: 734-615-4323
E-Mail: jslemrod@umich.edu

Shlomo Yitzhaki
Department of Economics
Hebrew University
Mount Scopus
Jerusalem 91905
ISRAEL
Tel: 972-2-659-2201
Fax: 972-2-652-2319
E-Mail: shlomo.yitzhaki@huji.ac.il
AB  - 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.
ER  -