The Enforcement of Income Tax Laws: Efficiency Implications*

J. C. Baldry

The Economic Record, 1984, vol. 60, issue 2, 156-159

Abstract: Complete enforcement of income tax laws, designed to reduce income tax evasion to zero, is shown to be inefficient. Starting from a ‘full compliance’ policy, it is shown that a marginal reduction in enforcement will always allow for tax reductions, hence increases in the ex‐ante utility levels of taxpayers. Only if the tax structure is rigid can full compliance be optimal.

Date: 1984
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