Modernization of Tax Administrations and Optimal Fiscal Policies
Journal of Public Economic Theory, Forthcoming
31 Pages Posted: 8 Jul 2009
Date Written: February 6, 2009
Abstract
Since Sandmo (1981), many articles have analyzed optimal fiscal policies in economies with tax evasion. All share a feature: they assume that the cost of enforcing the tax law is exogenous. However, governments often invest resources to reduce these enforcement costs. In a very simple model, we incorporate such investments in the analysis of an optimal fiscal policy. We characterize their optimal level and we show numerically how they interact with the other dimensions of the optimal fiscal policy. Finally, we highlight the differences between our results and those obtained in a model without investment in the tax administration.
Keywords: Tax administration,Tax rates,Tax evasion, Enforcement, Audit costs
JEL Classification: D82, H26, H83
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
The Effect of Marginal Tax Rates on Taxable Income: A Panel Study of The1986 Tax Reform Act
-
Tax Avoidance, Evasion, and Administration
By Joel B. Slemrod and Shlomo Yitzhaki
-
The Elasticity of Taxable Income: Evidence and Implications
By Jonathan Gruber and Emmanuel Saez
-
What Happens When You Tax the Rich? Evidence from Executive Compensation
-
A New Method of Estimating Risk Aversion
By Raj Chetty
-
Reported Incomes and Marginal Tax Rates, 1960-2000: Evidence and Policy Implications
-
Are "Real" Responses to Taxes Simply Income Shifting between Corporate and Personal Tax Bases?
By Roger H. Gordon and Joel B. Slemrod