Accuracy, Complexity, and the Income Tax

Journal of Law, Economics, & Organization, Vol. 14, No. 1, Spring 1998

Posted: 13 Jan 1998  

Louis Kaplow

Harvard Law School; National Bureau of Economic Research (NBER)

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Abstract

The complexity of the income tax is an unending source of complaint, and compliance costs are estimated to be very large. Yet most recognize that some degree of complexity is necessary if income is to be measured accurately. This article presents a framework for analyzing the value of greater accuracy in income taxation. Formulations for both distributive and incentive benefits of accuracy are offered. In addition, the article takes into account that compliance costs and the effects of complex provisions are endogenous, determined in significant part by taxpayers' information acquisition efforts. The article addresses whether taxpayers have excessive or inadequate incentives to acquire information about taxable income and to challenge tax assessments.

JEL Classification: H20, H24, H26, K34, K41

Suggested Citation

Kaplow, Louis, Accuracy, Complexity, and the Income Tax. Journal of Law, Economics, & Organization, Vol. 14, No. 1, Spring 1998. Available at SSRN: https://ssrn.com/abstract=52782

Louis Kaplow (Contact Author)

Harvard Law School ( email )

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