Wednesday, July 28, 2004

Henry J. Aaron (Brookings Institution) & Joel Slemrod (Michigan Business School) have published The Crisis in Tax Administration (Brookings, 2004). Here is the publisher’s summary:

People pay taxes for two reasons. On the positive side, most people recognize, even if grudgingly, that payment of tax is a duty of citizenship. On the negative side, they know that the law requires payment, that evasion is a crime, and that willful failure to pay taxes is punishable by fines or imprisonment. The practical questions for tax administration are how to strengthen each of these motives to comply with the law. How much should be spent on enforcement and how should enforcement be organized to promote these objectives and achieve the best results per dollar spent?

Over the last few years, the U.S. Congress has restricted spending on tax administration, forcing the Internal Revenue Service to curtail enforcement activities, at the same time, that the number of individual filers has increased, tax rules have become more complex, and more business have become multinational operations. But if too many cases of tax evasion go undetected and unpunished, those who may have grudgingly paid their taxes may soon find it easier to join the scofflaws. These events in combination have created a genuine crisis in tax administration.

The chapters in this volume evaluate the capacity of authorities to enforce the tax laws in a modern, global economy and examine the implications of failing to do so. Specific aspects of tax law, including tax shelters, issues relating to small businesses, tax software, role of tax preparers, and the objectives of tax simplification are examined in detail.

The volume also builds a conceptual basis for future scholarship, with regard not only to tax administration, but also to such fundamental questions as whether taxpayers respond mostly to economic incentives or are influenced by their experiences with the filing process and what is the proper framework for evaluating the allocation of resources within the IRS.

Here is the the table of contents:

1. Introduction, by Henry J. Aaron & Joel Slemrod

2. The Tax Shelter Battle, by Joseph Bankman; Comments by David Cay Johnston & David Weisbach

3. Issues of International Tax Enforcement, by David Tillinghast; Comments by James Hines, Jr. & Stephen Shay

4. Small Business and the Tax System, by Joel Slemrod; Comments by William Gentry & Morton Harris

5. The Turbo Tax Revolution: Can Technoolgy Solve Tax Complexity?, by Austan Goolsbee; Comments by Gerald Goldberg & Mark Mazur

6. Issues Affecting Low-Income Filers, by Janet Holtzblatt & Janet McCubbin; Comments by Leonard Burman & Nina Olson

7. Tax Preparers, by Marsha Blumenthal & Charles Christian; Comments by Peggy Hite & Gerald Padwe

8. Carrots and Sticks in Enforcement, by Frank Cowell; Comments by John Scholz & Douglas Shakelford

9. Effects of Tax Simplification Options: A Quantitative Analysis, by William Gale & Jeffrey Rohaly; Comments by David Glickman & Deborah Schenk

10. Ultimate Objectives for the IRS: Balancing Revenue and Service, by Alan Plumley & C. Eugene Steuerle; Comments by Donald Alexander & James W. Wetzler

11. Experience and Innovations in Other Countries, by Jeffrey Owens & Stuart Hamilton; Comments by Victoria Perry & Joop van Lunteren