Accuracy, Complexity, and the Income Tax

Louis Kaplow

No 4631, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The complexity of the income tax is an unending source of complaint. Compliance costs have received increasing attention and are estimated to be large. Yet most recognize that some degree of complexity is necessary if ability to pay 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. The question whether taxpayers have excessive or inadequate incentives to acquire information about taxable income and to challenge tax assessments is also examined.

JEL-codes: H24 (search for similar items in EconPapers)
Date: 1994-01
Note: PE
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Published as Journal of Law, Economics, and Organization, vol. 14, no. 1, pp. 61-83, 1998.

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