Alex Raskolnikov (Columbia) presents Are Graduated Tax Penalties Efficient? at Columbia today as part of its Faculty Workshop Series:

This essay searches for an efficiency-based justification of graduated tax penalties and finds none. The optimal deterrence approach successfully used in many areas of economic regulation is unhelpful in designing the real-life tax rules and sanctions because the ideal tax system is so different from the real one. More limited inquires focusing on various partial tradeoffs for assessing tax rules and penalties are incomplete, indeterminate, or implausible. Arguments suggesting that graduated tax sanctions are efficient for the reasons unrelated to the efficiency of the underlying substantive rules are mistaken or lack empirical support crucial for their validity.