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 September 18, 2024

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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