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The author is grateful for comments from Vito Tanzi, M. Casanegra de Jantscher, Peter S. Griffith, Carlos A. Silvani, and David C. Nellor. Any remaining errors or omissions are my own.
Several economists have written on aspects of tax administration without integrating these writings with theories of tax policy (see References). In addition, in the context of advice on practical situations, a number of perceptive economists have given attention to administrative constraints on tax policy.
See Ricketts (1981), in the book of readings by Peacock and Forte (1981). For a statement of optimal tax theory, see Atkinson and Stiglitz (1980).
This literature begins with Becker (1968). For a recent critical summary see Conference on Tax Administration Research, vol. 1 (IRS), 1985.
See Skinner and Slemrod, 1985. The reader should note that after 1986 the civil fraud penalty was raised from 50 to 75 percent and modified. The change does nto affect the substance of the argument.
For a summary of this literature see Richupan (1985).
See Tanzi (1982), chapter 4, “Underground Economy and Tax Evasion in the United States: Estimates and Implications,” pp. 78-80.
An additional assumption is that the elasticities of the supply of labor are such that the actions of higher income taxpayers gaining from the change more than offset those of lower income taxpayers losing from the change.
See Richupan (1985). For a full exposition of the application of supply side taxation ideas to developing countries see Gandhi (1985).
See Wall Street Journal, May 8, 1986.
See Bird (1983).
See Casanegra de Jantscher (1986).
A complete explanation of differences in effective tax structures would certainly acknowledge that differences in the structure of production and income distribution play a role in determining tax structure. For example, the fact that large numbers of the population in many developing couantries live at poverty levels explains why a mass income tax would not be feasible.
The tax handle theory has also been used to explain different tax levels as well as tax structure among different countries. See the references above.
See Mutén (1981).
Data for developing countries refer to a three-year period generally centered around 1979 (see Table 2).
For a more complete discussion of the use of presumptive income assessments, see Tanzi and Casanegra de Jantscher (1986).