Working Paper: NBER ID: w22408
Authors: Michael Keen; Joel Slemrod
Abstract: 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.
Keywords: No keywords provided
JEL Codes: H21; H26
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| enforcement elasticity of tax revenue (H30) | behavioral response to administrative measures (C99) |
| effectiveness of tax administration (H26) | revenue collection (H26) |
| elasticity of evasion (H26) | compliance gap (L15) |
| administrative measures (H83) | revenue collection (H26) |
| optimal compliance gap (H21) | balance between compliance costs and administrative effectiveness (K23) |
| administrative measures (H83) | comparative elasticities of enforcement and taxable income (H31) |