Optimal Tax Administration
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.
We thank Anne Brockmeyer, John Creedy, Vitor Gaspar, Norman Gemmell, Christian Gillitzer, Shafik Hebous, Christos Kotsogiannis, Alan Plumley and Mick Thackray for many helpful comments and suggestions, and Will Boning for excellent research assistance. Views and opinions are ours alone, and should not be attributed to the management or Executive Board of the International Monetary Fund, nor to the National Bureau of Economic Research.
Michael Keen & Joel Slemrod, 2017. "Optimal Tax Administration," IMF Working Papers, vol 17(8).
Keen, Michael & Slemrod, Joel, 2017. "Optimal tax administration," Journal of Public Economics, Elsevier, vol. 152(C), pages 133-142. citation courtesy of