## wp1708

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### I. Introduction — framing and key questions
- Paper frames optimal tax administration around three questions:
  - Usefulness of the "compliance gap" (difference between tax legally due and tax actually collected) and whether the optimal compliance gap is zero.
  - What policymakers need to know about the costs and effectiveness of administrative interventions to set them optimally.
  - How to choose between raising statutory tax rates and strengthening tax administration to raise additional revenue.
- Key concepts introduced:
  - Compliance gap: difference between tax legally due and tax actually collected.
  - Enforcement elasticity: responsiveness of revenue collected to administrative interventions (one elasticity for each administrative instrument); administration-side analogue of the taxable-income elasticity.
  - Net-of-tax statutory rate: "unity minus the tax rate."
- Central result preview:
  - At an optimum, the enforcement elasticity is equated to a variant of the usual cost-revenue ratio.
  - Choice between rate increases and enforcement depends on the taxable-income elasticity, the enforcement elasticity, and implementation cost-revenue ratios.

### Simple benchmark framework and core analytical results (Section 2)
- Model structure and first-order conditions:
  - Representative individual with quasi-linear preferences chooses private consumption x, hours l, and concealment e; public spending g financed by proportional tax rate t.
  - Individual first-order conditions (benchmark): (1 − t)w − φ′(l) = 0 and t − c_e(e, α) = 0, defining l(t, w) and e(t, α) with e_α = −c_{eα}/c_{ee} < 0.
  - Administration cost a(α) with a′ > 0; government budget constraint leads to social welfare formulation.
- Optimal tax-rate condition:
  - Equation (7): elasticity of reported taxable income E(z, 1 − t) is a sufficient statistic for the marginal welfare impact of a tax-rate change.
  - Numerical illustration: with v′ = 1.2 and elasticity of taxable income = 0.25, (7) implies an optimal (tax-inclusive) tax rate of 40 percent.

### Enforcement elasticity, optimal enforcement, and Proposition 1
- Government chooses enforcement instrument α; necessary condition (8) balances additional revenue from enforcement with additional compliance and administration costs.
- Define adjusted marginal cost-revenue ratio Φ (eq. (9)) and enforcement elasticity E(z, α) summarized in (10).
- PROPOSITION 1:
  - At an optimum, the enforcement elasticity of tax revenue is equal to the adjusted marginal cost-revenue ratio.
  - Interpretation: E(z, α) is a sufficient statistic for behavioral response to administrative measures just as E(z, 1 − t) is for rate changes.
  - Special case homogeneous implementation costs: if α c_α = c(α) and α a_α = a(α), the right-hand side of (9) equals the sum of compliance and administration costs relative to revenue collected (adjusted by marginal value of public funds).
- Calibrated illustrative values and implication:
  - Administrative cost ratio a/tz = 0.006
  - Compliance cost ratio c/tz = 0.11
  - v′ = 1.2
  - Result: Proposition 1 implies an enforcement elasticity at the optimum of around 0.1; an elasticity higher than this would warrant additional spending on implementation.
- Caveat on convex costs:
  - If compliance and administration costs are convex in α, adjusted marginal cost-revenue ratio Φ exceeds the simple sum of average ratios; observed adjusted average implementation costs set a lower bound on enforcement elasticity if observed position is optimal (equation (11)).

### Optimal compliance gap and Proposition 2
- Compliance gap definition:
  - G ≡ te / twl = e / wl.
- Enforcement elasticity via evasion elasticity:
  - E(e, α) < 0 and enforcement elasticity expressed via evasion elasticity (eq. (12)).
- PROPOSITION 2:
  - At an optimum, the compliance gap satisfies the inverse-elasticity relationship (13):
    - G/(1 − G) = (adjusted marginal cost-revenue ratio) / (−E(e, α)).
- Practical interpretation example:
  - IRS aggregate compliance gap of 14.5 percent can be optimal only if a 10 percent increase in IRS spending would reduce evasion by about 5 percent (textual example).

### Interaction of tax rate and enforcement — Proposition 3
- Best-response slope dt/dα depends on the cross-effect ∂e_α/∂t (notation ݁_{e t α} in text).
- PROPOSITION 3:
  - The statutory tax rate and enforcement are strategic complements (dt/dα > 0) if the cross-effect on evasion ݁_{e t α} < 0.
  - Interpretation: If more effective administration dampens the marginal impact of a higher tax rate in encouraging evasion, then weaker administration should be met by lower tax rates and vice versa.

### Choosing between raising rates and strengthening enforcement — Proposition 4
- PROPOSITION 4:
  - It is better to raise additional revenue by strengthening enforcement than by raising the statutory tax rate iff condition (16) holds, comparing enforcement elasticity with elasticities of taxable income and adjusted implementation costs.
- Numerical illustration:
  - With (tax-inclusive) tax rate at 40 percent and prior calibrations, enforcement is preferred if enforcement elasticity ≥ 0.1.

### Extensions and generalizations
- Multiple instruments and fixed administrative budget:
  - α vector (α1,...,αn); condition (17): at optimum, revenue elasticity w.r.t. each instrument equals its adjusted marginal cost-revenue ratio.
  - With binding budget a(α) ≤ ā, revenue elasticity for each instrument optimally exceeds its adjusted cost-revenue ratio (relation (18)).
- General preferences:
  - Proposition 1 survives with v′ replaced by W_r/W_x.
- Transfer costs:
  - If a proportion μ of compliance costs are pure transfers, enforcement elasticity remains sufficient; marginal cost-revenue ratio should reflect only (1 − μ) of compliance costs.
- Many households:
  - Taxable-income elasticity in tax-rate choice aggregates with distributional weights; enforcement elasticity sufficiency requires strong common-structure assumptions across households.
- More general implementation costs (c(wl, e, s, α), a(α, z)):
  - Real labor decisions can be affected by enforcement; comparative statics become more complex.
  - PROPOSITION 5: Optimal enforcement satisfies (23): enforcement elasticity times Φ equals adjusted marginal cost-revenue ratio (Φ defined in (22)); costs expressed relative to revenue net of marginal admin costs t − z a_z.
  - PROPOSITION 6: Optimal compliance gap generalized in (26): compliance gap depends on Φ and weighted average of elasticities of evasion and legally liable income (eqs. (24)–(26)).
  - If tougher enforcement reduces legally taxable income (E(wl − s, α) < 0), the optimal compliance gap is higher than the simple inverse-elasticity rule of Proposition 2.
- Discrete administrative reforms:
  - PROPOSITION 7 (discrete reforms, v′ constant): welfare-improving discrete reform α0 → α1 iff arc enforcement elasticity scaled by marginal value of public funds exceeds scaled changes in compliance and administration costs (condition (28)). For small reforms, reduces to Proposition 1.

### Toward estimating enforcement elasticities — empirical evidence and examples
- Existing evidence is sparse; estimating enforcement elasticities is difficult but central to policy.
- Empirical points and examples summarized:
  - Alm (2012): econometric work and lab experiments point to elasticities of reported income with respect to audit rate of 0.1 to 0.2 (direct impact), with decreasing marginal effects.
  - IRS historical marginal revenue-to-cost ratios (Frank Malanga, 1986): ranged between 7.0 (examination) to 26.9 (delinquent returns) — methodology not fully spelled out and excludes deterrent effects.
  - Hodge et al. (2015) IRS correspondence-audit study: marginal revenue-cost ratios vary among seven categories from 4.29 to 9.98; translating their data yields enforcement elasticities between 0.60 and 0.99.
  - IRS fiscal 2016 budget request example: $421 million requested estimated to generate $2,799 million in annual enforcement revenue, “achieving an ROI of $6.4 to $1.0.” Eleven initiatives have estimated ROIs ranging from 1.8 to 20.6. These ROI measures generally capture direct revenue only and omit deterrent and network effects.
  - IMF (2015) panel regression (27 countries, 2000–2011) of VAT compliance gap on total tax-administration expenditure: estimated long-run enforcement elasticity ≈ 0.17 (identification caveats noted).
  - Indirect/deterrent effects: some literature suggests indirect effects can be 3–5 times as large as direct effects (Alm, undated, as cited).
- Policy implication: both enforcement elasticities and marginal compliance/administration-cost responses to interventions are necessary to evaluate optimal administrative reform and budgets.

### Conclusions and policy takeaways
- Key innovation: defining the enforcement elasticity of tax revenue as a sufficient statistic for behavioral response to administration, analogous to the taxable-income elasticity for rate changes.
- Central efficiency rule: at an optimum, the enforcement elasticity equals marginal compliance + administration costs relative to revenue (adjusted for financing from distortionary taxes).
- Practical policy questions addressed:
  - Optimal size of a tax administration.
  - Characterization of the optimal compliance gap.
  - Substitutability or complementarity between enforcement measures and statutory rate increases.
  - Choice between raising additional revenue via higher statutory rates or via stronger enforcement depends on enforcement elasticity, taxable-income elasticity, and implementation cost composition.
- Empirical gap and recommended directions:
  - Lack of comprehensive estimates of enforcement elasticities and marginal implementation-costs is the main obstacle to practical implementation.
  - Promising empirical approaches include randomized controlled trials, administrative-data-based marginal-revenue studies, and multi-country panel analyses.

*Source: wp1708 — IMF working paper (section content provided).*

### References .............................................................................................................

### References

### I. INTRODUCTION — framing and key questions
- Paper sets out simple analytics of optimal tax administration focusing on three questions.
- Question 1: Usefulness of the concept of the "compliance gap" — defined as the difference between the amount of tax legally due and that actually collected.
  - Compliance gaps are produced regularly (examples cited: IRS (2012); HMRC (2015); European Commission (2015); IMF (2015); Keen (2013)).
  - Critique (Gemmell and Hasseldine (2014)): the mechanical construction of the compliance gap abstracts from behavioral responses; reductions in the compliance gap may reduce real activity and possibly revenue.
  - Implication: the optimal compliance gap is not zero; key question: "What exactly is the ’optimal’ compliance gap?" and "How can we know whether an observed compliance gap is too big or too small?"
- Question 2: What do policy makers need to know about the costs and effectiveness of administrative interventions to set them optimally?
  - Policy-side literature emphasizes when the elasticity of a reported tax base with respect to the net-of-tax statutory rate is a sufficient statistic for the choice of marginal tax rate.
  - "Net-of-tax statutory rate" is defined as "unity minus the tax rate."
  - Empirical literature focuses on estimating this elasticity, particularly the elasticity of taxable income (see Saez, Slemrod and Giertz (2012) for a review).
  - Administration-side: classic treatment starts with Mayshar (1991); question remains whether concepts analogous to the taxable income elasticity can guide empirical work on administrative interventions.
- Question 3: Choice between raising statutory tax rates versus strengthening tax administration to raise additional revenue.
  - Introduces the central concept of the paper: the enforcement elasticity of tax revenue — the responsiveness of revenue collected to administrative interventions (one such elasticity for each instrument of administration).
  - Enforcement elasticity is the administration-side analogue to the elasticity of taxable income and acts as a sufficient statistic for behavioral impacts of administrative interventions, encompassing effects on true and concealed activities.
  - At an optimum, the enforcement elasticity is equated to a straightforward variant of the usual cost-revenue ratio.
  - The paper provides a simple rule that clarifies the role of a quantity long focused on in tax administration literature (dating back to Sandford (1973)).
  - The choice between policy (rate) and administrative measures depends on the balance between the two elasticities (tax-base elasticity and enforcement elasticity) together with a simpler form of the cost-revenue ratio.
  - Optimal compliance gap characterization (benchmark case): simple inverse elasticity rule where the relevant elasticity is that of evasion with respect to enforcement.
  - More generally, the optimal gap reflects distinct reactions to administrative actions of both real earnings (as stressed by Gemmell and Hasseldine (2014)) and legal avoidance.

### Key concepts, references, and literature anchors
- Compliance gap: difference between tax legally due and tax actually collected; widely used but behaviorally limited.
- Enforcement elasticity: responsiveness of revenue to administrative interventions; central sufficient statistic for administration-side analysis.
- Elasticity of taxable income / net-of-tax elasticity: policy-side sufficient statistic for rate-setting; reviewed in Saez, Slemrod and Giertz (2012).
- Foundational and relevant works cited in the introduction:
  - IRS (2012)
  - HMRC (2015)
  - European Commission (2015)
  - Keen (2013)
  - IMF (2015)
  - Gemmell and Hasseldine (2014)
  - Mayshar (1991)
  - Saez, Slemrod and Giertz (2012)
  - Sandford (1973)

*Source: wp1708 - References (excerpt) — IMF working paper content.*

### Section 2 establishes core results in a simple benchmark case,

### wp1708 - Section 2 establishes core results in a simple benchmark case

### Simple benchmark framework and core analytical results
- Representative individual with quasi-linear preferences and choices over private consumption x, hours l, concealment e; public spending g financed by proportional tax at rate t.
- Individual first-order conditions (benchmark case): (1 − t)w − φ′(l) = 0 and t − c_e(e, α) = 0, defining l(t, w) and e(t, α) with e_α = −c_{eα}/c_{ee} < 0.
- Administration cost a(α) with a′ > 0 and government budget constraint (3) leading to social welfare (4).
- Optimal tax-rate condition (equation (7)): elasticity of reported taxable income E(z, 1 − t) is a sufficient statistic for the marginal welfare impact of a tax-rate change; higher E(z, 1 − t) implies, ceteris paribus, lower optimal tax rates.
  - Numerical illustration: with v′ = 1.2 and elasticity of taxable income = 0.25, (7) implies an optimal (tax-inclusive) tax rate of 40 percent.

### Optimal administrative interventions — enforcement elasticity and Proposition 1
- Government choice of enforcement α yields necessary condition (8) balancing additional revenue from stricter enforcement and additional compliance + administration costs.
- Define adjusted marginal cost-revenue ratio Φ (eq. (9) / text definition); enforcement elasticity E(z, α) (or E(T, α) more generally) summarized in (10).
- PROPOSITION 1: At an optimum, the enforcement elasticity of tax revenue is equal to the adjusted marginal cost-revenue ratio.
  - Interpretation: E(z, α) is a sufficient statistic for behavioral response to administrative measures in the same way E(z, 1 − t) is for rate changes.
  - When implementation costs are homogeneous so α c_α = c(α) and α a_α = a(α), the right-hand side of (9) equals the sum of compliance and administration costs relative to revenue collected (adjusted by marginal value of public funds).

### Illustrative calibrated values and implications for optimal enforcement
- Illustrative U.S. personal income tax calibrations used in text:
  - administrative cost ratio a/tz = 0.006
  - compliance cost ratio c/tz = 0.11
  - v′ = 1.2
  - Result: Proposition 1 implies an enforcement elasticity at the optimum of around 0.1; an elasticity higher than this would warrant additional spending on implementation.
- Caveat: if compliance and administration costs are convex in α, the adjusted marginal cost-revenue ratio φ exceeds the simple sum of average ratios; observed adjusted average implementation costs set a lower bound on enforcement elasticity if observed position is optimal (equation (11)).

### Optimal compliance gap and Proposition 2
- Define compliance gap G ≡ te / twl = e / wl.
- Enforcement elasticity expressed via evasion elasticity (eq. (12)), with E(e, α) < 0.
- PROPOSITION 2: At an optimum, the compliance gap satisfies the inverse-elasticity relationship (13):
  - G/(1 − G) = (adjusted marginal cost-revenue ratio) / (−E(e, α))  (text form; see (13)).
- Practical interpretation:
  - Example: IRS aggregate compliance gap of 14.5 percent can be optimal only if a 10 percent increase in IRS spending would reduce evasion by about 5 percent (textual example).

### Interaction of tax rate and enforcement — complementarity and Proposition 3
- Best-response slope dt/dα sign depends on cross-effect ∂e_α/∂t (notation ݁_{e t α} in text); result:
- PROPOSITION 3: The statutory tax rate and enforcement are strategic complements (dt/dα > 0) if the cross-effect on evasion ݁_{e t α} < 0.
  - Interpretation: If more effective administration dampens the marginal impact of a higher tax rate in encouraging evasion, then weaker administration should be met by lower tax rates and vice versa.

### Choosing between raising rates and strengthening enforcement — Proposition 4
- PROPOSITION 4: It is better to raise additional revenue by strengthening enforcement than by raising the statutory tax rate iff condition (16) holds, which compares the enforcement elasticity with elasticities of taxable income and adjusted implementation costs.
  - Numerical illustration: with (tax-inclusive) tax rate at 40 percent and prior calibrations, enforcement is preferred if enforcement elasticity ≥ 0.1.

### Extensions (overview) — multiple instruments, preferences, transfers, households, general implementation costs, discrete reforms
- Multiple instruments and fixed administrative budget:
  - α as vector (α1,...,αn) and condition (17): at optimum, revenue elasticity w.r.t. each instrument equals its adjusted marginal cost-revenue ratio.
  - With a binding budget a(α) ≤ ā, revenue elasticity for each instrument optimally exceeds its adjusted cost-revenue ratio (relation (18)).
- General preferences:
  - Proposition 1 and related results survive, replacing v′ by W_r/W_x.
- Transfer costs:
  - If a proportion μ of compliance costs are pure transfers, the enforcement elasticity remains sufficient; marginal cost-revenue ratio should reflect only (1 − μ) of compliance costs.
- Many households:
  - Taxable-income elasticity in tax-rate choice aggregates with distributional weights; enforcement elasticity remains sufficient under the strong assumptions of common evasion structure.
- More general implementation costs (c(wl, e, s, α), a(α, z)):
  - Real labor decisions can be affected by enforcement; broader comparative statics become complex.
  - PROPOSITION 5: Optimal enforcement satisfies (23): enforcement elasticity times Φ equals adjusted marginal cost-revenue ratio (Φ defined in (22)); difference from Proposition 1 is minor, with costs expressed relative to revenue net of marginal admin costs t − z a_z.
  - PROPOSITION 6: Optimal compliance gap generalized in (26): compliance gap depends on Φ and weighted average of elasticities of evasion and legally liable income (eqs. (24)–(26)).
  - If tougher enforcement reduces legally taxable income (E(wl − s, α) < 0), the optimal compliance gap is higher than the simple inverse-elasticity rule of Proposition 2.
- Discrete administrative reforms:
  - PROPOSITION 7 (discrete reforms, v′ constant): welfare-improving discrete reform α0 → α1 iff arc enforcement elasticity scaled by marginal value of public funds exceeds scaled changes in compliance and administration costs (condition (28)). For small reforms, this reduces to Proposition 1.

### Toward estimating enforcement elasticities — empirical evidence and examples
- Existing empirical evidence is sparse; estimating enforcement elasticities is difficult but central to policy.
- Summarized empirical points from text:
  - Alm (2012): econometric work and lab experiments point to elasticities of reported income wrt audit rate of 0.1 to 0.2 (direct impact), with decreasing marginal effects.
  - IRS historical marginal revenue-to-cost ratios (Frank Malanga, 1986): ranged between 7.0 (examination) to 26.9 (delinquent returns) — methodology not fully spelled out and excludes deterrent effects.
  - Hodge et al. (2015) IRS study (correspondence audits): marginal revenue-cost ratios vary among seven categories from 4.29 to 9.98, which translates (using their data) into enforcement elasticities between 0.60 and 0.99.
  - IRS fiscal 2016 budget request example: $421 million requested estimated to generate $2,799 million in annual enforcement revenue, “achieving an ROI of $6.4 to $1.0.” Eleven specific initiatives have estimated ROIs ranging from 1.8 to 20.6. These ROI measures generally capture direct revenue only and omit deterrent and network effects.
  - IMF (2015) panel regression (27 countries, 2000–2011) regression of VAT compliance gap on total tax-administration expenditure: estimated long-run enforcement elasticity ≈ 0.17 (identification caveats and reduced-form nature noted).
  - Indirect effects: some literature suggests indirect/deterrent effects can be 3–5 times as large as direct effects (Alm, undated, as cited).
- Policy implication: both enforcement elasticities and marginal compliance/administration-cost responses to interventions are necessary to evaluate optimal administrative reform and budgets.

### Conclusions and policy takeaways
- Key innovation: the enforcement elasticity of tax revenue (elasticity of tax revenue with respect to an administrative intervention) is a sufficient statistic for the behavioral response to administration, analogous and often more robust than the taxable-income elasticity for rate changes.
- Central efficiency rule: at an optimum, the enforcement elasticity equals marginal compliance + administration costs relative to revenue (adjusted for financing from distortionary taxes).
- Practical policy questions addressed:
  - Optimal size of a tax administration.
  - Characterization of the optimal compliance gap.
  - Substitutability or complementarity between enforcement measures and statutory rate increases.
  - Choice between raising additional revenue via higher statutory rates or via stronger enforcement depends on enforcement elasticity, taxable-income elasticity, and implementation cost composition.
- Empirical gap: lack of comprehensive estimates of enforcement elasticities and of marginal implementation-costs with respect to instruments is the main obstacle to practical implementation; promising empirical directions include randomized controlled trials, administrative-data-based marginal-revenue studies, and multi-country panel analyses.

*Source: wp1708 - Section 2 establishes core results in a simple benchmark case (IMF Working Paper — section content provided).*

### REFERENCES

### REFERENCES

### Works on tax compliance, evasion, morale, and experiments
- Alm, James, 2012, “Measuring, Explaining, and Controlling Tax Evasion: Lessons from Theory, Experiments, and Field Studies,” International Tax and Public Finance, Vol. 19, pp. 54-77.
- Alm, James, undated, “What Motivates Compliance? Learning from Academic Research on Tax Compliance.” Mimeo, Tulane University.
- Carrillo, Paul, Dina Pomeranz and Monica Singhal, 2014, “Dodging the Taxman: Firm Misreporting and the Limits to Tax Enforcement,” National Bureau of Economic Research Working Paper No. 20624.
- Kleven, Henrik, Martin B. Knudsen, Claus Thustrup Kreiner, Søren Pedersen and Emmanuel Saez, 2011, “Unwilling or Unable to Cheat? Evidence from a Tax Audit Experiment in Denmark,” Econometrica, Vol. 79, pp. 651-692.
- Luttmer, Erzo F.P. and Monica Singhal, 2014, “Tax Morale,” Journal of Economic Perspectives, Vol. 28, pp. 149-168.
- Pomeranz, Dina, 2015, “No Taxation without Information: Deterrence and Self-Enforcement in the Value Added Tax,” American Economic Review, Vol. 105, pp. 2539-2569.
- Kleven et al., 2011 (as cited above) — experimental evidence on audit effects.
- Slemrod, Joel, Marsha Blumenthal and Charles Christian, 2001, “Taxpayer Response to an Increased Probability of Audit: Evidence from a Controlled Experiment in Minnesota,” Journal of Public Economics, Vol. 79, pp. 455-483.
- Ortega, Daniel and Carlos Scartascini, 2015, “Don’t Blame the Messenger: A Field Experiment on Delivery Methods for Increasing Tax Compliance.” Inter-American Development Bank.

### VAT, tax gaps, and administration studies
- European Commission, 2015, Study to Quantify and Analyze the VAT Gap in the EU Member States: 2015 Report. Brussels, TAXUD/2013/DE/321.
- Keen, Michael, 2013, “The Anatomy of the VAT,” National Tax Journal ̧ Vol. 66, pp. 423-446.
- Keen, Michael, 2016, “Some Empirics of Compliance Gaps,” forthcoming in the Journal of the Japan Institute of Public Finance Zaisei Kenkyu.
- Gemmell, Norman and John Hasseldine, 2014, “Taxpayers’ Behavioural Responses and Measures of Tax Compliance ‘Gaps’: A Critique and a New Measure,” Fiscal Studies, Vol.35, pp. 275-296.
- HM Revenue and Customs, 2015, Measuring Tax Gaps 2015 Edition: Tax Gap Estimates for 2013-14. Available at https://www.gov.uk/government/statistics/measuring-tax-gaps.
- Internal Revenue Service, 2012, Tax Gap for the Year 2006: Overview, January 6. Available at https://www.irs.gov/pub/newsroom/overview_tax_gap_2006.pdf.
- Internal Revenue Service, 2016, The IRS Budget in Brief, 2016. Available at https://www.irs.gov/PUP/newsroom/IRS%20Budget%20in%20Brief%20FY%202016.pdf.
- OECD, 2015, Tax Administration 2015: Comparative Information on OECD and Other Advanced and Emerging Economies. Available at http://www.oecd.org/ctp/administration/tax-administration- 23077727.html.
- European Commission and HMRC sources (as cited above) — empirical quantification of VAT and tax gaps.

### Tax enforcement, marginal costs/revenue, and administration design
- Hodge, Ronald H., Alan H. Plumley, Kyle Richison, Getaneh Yismaw, Nicole Misek, Matt Olson and H. Sanith Wijesinghe, 2015, “Estimating Marginal Revenue/Cost Curves for Correspondence Audits,” Mimeo, Internal Revenue Service.
- Malanga, Frank, 1986, “The Relationship Between IRS Enforcement and Tax Yield,” National Tax Journal, Vol. 39, pp. 333-337.
- Mayshar, Joram, 1991, “Taxation with Costly Administration,” Scandinavian Journal of Economics, Vol. 93, pp.75-88.
- Slemrod, Joel, 2016, “Tax Compliance and Enforcement: New Research and its Policy Implications,” Available at SSRN, paper no. 2726077.
- Hodge et al., 2015 (as cited above) — IRS analysis of correspondence-audit marginal revenue/cost.

### Taxable income elasticity, avoidance, and welfare effects
- Chetty, Raj, 2009, “Is the Taxable Income Elasticity Sufficient to Calculate Deadweight Loss? The Implications of Evasion and Avoidance,” American Economic Journal: Economic Policy, Vol. 1, pp. 31-52.
- Saez, Emmanuel, Joel Slemrod and Seth Giertz, 2012, “The Elasticity of Taxable Income with Respect to Marginal Tax Rates: A Critical Review,” Journal of Economic Literature, Vol. 50, pp. 3-50.
- Slemrod, Joel and Wojciech Kopczuk, 2002, “The Optimal Elasticity of Taxable Income” Journal of Public Economics, Vol. 84, pp. 91 -112.
- Gorodnichenko, Yuriy, Jorge Martinez-Vazquez and Klara Sabirianova Peter, 2009, “Myth and Reality of Flat Tax Reform: Micro Estimates of Tax Evasion Response and Welfare Effects in Russia,” Journal of Political Economy, Vol. 117, pp. 504-554.
- Yitzhaki, Shlomo, 1987, “On the Excess Burden of Tax Evasion,” Public Finance Review, Vol. 15, pp.123- 137.

### Tax complexity, simplification, and administration costs
- Slemrod, Joel, 1989, “The Return to Tax Simplification: An Econometric Analysis,” Public Finance Review, Vol. 17, pp. 3-27.
- Slemrod, Joel, 2001, “A General Model of the Behavioral Response to Taxation,” International Tax and Public Finance, Vol. 8, pp. 119-128.
- Slemrod, Joel, 2004, “Measuring Tax Complexity,” Written Testimony Submitted to the Committee on Ways and Means, Hearing on Tax Simplification, June 15.
- Slemrod, Joel and Christian Gillitzer, 2014, Tax Systems (MIT Press: Cambridge MA).
- Evans, Chris. 2003, “Studying the Studies: An Overview of Recent Research into Taxation Operating Costs,” eJournal of Tax Research, Vol. 1, pp. 64-79.
- Sandford, Cedric, 1973, Hidden Costs of Taxation (Institute for Fiscal Studies: London).

### Other methodological and policy-relevant contributions
- Creedy, John, 2016, “Optimal Tax Enforcement: Keen and Slemrod Explained,” Mimeo, Victoria Business School, Wellington.
- Slemrod, Joel, Brett Collins, Jeffrey L. Hoopes, Daniel A. Reck and Michael Sebastiani, 2015, “Does Credit Card Information Improve Small Business Tax Compliance?” Available at SSRN, paper no. 21412.
- International Monetary Fund, 2015, “Current Challenges in Revenue Mobilization: Improving Tax Compliance.” Available at https://www.imf.org/external/np/pp/eng/2015/020215a.pdf.
- Hodge et al., 2015; Creedy, 2016; Slemrod et al., 2015 — methodological and policy analyses on enforcement design and information use.

*Source: wp1708 - REFERENCES*

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_Source: https://www.imf.org/-/media/files/publications/wp/wp1708.pdf_