IMF Working Papers

Optimal Tax Administration

By Michael Keen, Joel Slemrod

January 20, 2017

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Michael Keen, and Joel Slemrod. Optimal Tax Administration, (USA: International Monetary Fund, 2017) accessed November 8, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

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. Its key contribution is the development of 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.

Subject: Compliance costs, National accounts, Personal income, Revenue administration, Revenue performance assessment, Tax administration core functions, Tax gap

Keywords: Administration cost, Compliance costs, Cost-revenue ratio, Elasticity rule, Enforcement elasticity, Implementation cost, IRS initiative, Marginal revenue-cost ratio, Optimal taxation, Personal income, Tax administration, Tax administration core functions, Tax compliance, Tax gap, Tax rate, Taxable income, WP

Publication Details

  • Pages:

    27

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2017/008

  • Stock No:

    WPIEA2017008

  • ISBN:

    9781475570267

  • ISSN:

    1018-5941

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