240 pp., 6 x 9 in, 1 figure, 4 tables
- Published: December 13, 2013
An approach to taxation that goes beyond an emphasis on tax rates to consider such aspects as administration, compliance, and remittance.
Despite its theoretical elegance, the standard optimal tax model has significant limitations. In this book, Joel Slemrod and Christian Gillitzer argue that tax analysis must move beyond the emphasis on optimal tax rates and bases to consider such aspects of taxation as administration, compliance, and remittance.
Slemrod and Gillitzer explore what they term a tax-systems approach, which takes tax evasion seriously; revisits the issue of remittance, or who writes the check to cover tax liability (employer or employee, retailer or consumer); incorporates administrative and compliance costs; recognizes a range of behavioral responses to tax rates; considers nonstandard instruments, including tax base breadth and enforcement effort; and acknowledges that tighter enforcement is sometimes a more socially desirable way to raise revenue than an increase in statutory tax rates. Policy makers, Slemrod and Gillitzer argue, would be well advised to recognize the interrelationship of tax rates, bases, enforcement, and administration, and acknowledge that tax policy is really tax-systems policy.
Avoidance, evasion, compliance, and administration are 50 percent of the real action but only 5 percent of academic research on taxation. Joel Slemrod has been dominant in rectifying this imbalance. Tax Systems consolidates his and others' work and leads the way forward.
Louis Kaplow, Finn M. W. Caspersen and Household International Professor of Law and Economics, Harvard Law School
Research on tax design often overlooks essential issues of policy implementation. Tax Systems addresses this important oversight, providing insightful analysis on topics including compliance, complexity, remittance, and the design of information reports. Researchers and policy-makers will find this volume a compelling demonstration of how economic analysis can inform the key questions of tax administration.
James Poterba, Mitsui Professor of Economics, MIT, and President, National Bureau of Economic Research
Many have said that useful tax advice must recognize issues of implementation (and human nature) as well as design, but no one has really done it—until now. This elegant (and sometimes even entertaining) book draws together the threads of the quiet revolution in the economics of taxation over the last few years to show how the area is moving towards a more holistic and persuasive analysis of taxation. No one is better placed than the authors to do this, or to convey the excitement of the process.
Michael Keen, Deputy Director, Fiscal Affairs Department, International Monetary Fund