Optimal Tax Administration

Michael Keen and Joel Slemrod

No 2017/008, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: WP; tax rate; taxable income; Tax administration; tax compliance; optimal taxation; enforcement elasticity; administration cost; cost-revenue ratio; marginal revenue-cost ratio; elasticity rule; implementation cost; IRS initiative; Personal income; Tax administration core functions; Tax gap; Compliance costs (search for similar items in EconPapers)
Pages: 27
Date: 2017-01-20
References: Add references at CitEc
Citations: View citations in EconPapers (70)

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Journal Article: Optimal tax administration (2017)
Working Paper: Optimal Tax Administration (2016)
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