The effect of tax simplification on individuals

Tax reform

Genes as Tags: The Tax Implications of Widely Available Genetic Information

This paper examines how progress in genetics\u27 specifically, the proliferation of knowledge about the human genome\u27 may influence the feasibility and desirability of a tax that is based on individual human endowments or ability. The paper explores various forms that such a genetic endowment tax-and-transfer regime might take and identifies some of the benefits and costs of such a regime. The authors take no position on whether a genetic endowment tax would be desirable or not. However, one contribution of the paper is to observe that current law in the U.S., which restricts the use of genetic information by insurers and employers, is equivalent to a form of genetic endowment tax. The paper also notes that, in the absence of a government-mandated transfer policy with respect to genetic endowments, private insurance markets may arise to fill the gap, allowing individuals to purchase insurance against the possibility of a bad genetic draw

Of Coase, Calabresi, and Optimal Tax Liability

The Coase Theorem and the vast literature it inspired explore two basic questions: to whom should responsibility for external harms be assigned and how will that assignment matter. Building on the Coasean insight in the torts context, Guido Calabresi observed that the assignment of tort liability can indeed matter from an efficiency perspective and should, under certain assumptions, be assigned to the “cheapest cost avoider.” This article applies a similar Coasean/Calabresian framework to a related (though not identical) set of questions in the tax context: To whom should the responsibility for remitting taxes be assigned and when and how will that assignment matter? Following Calabresi’s canonical formulation for the design of an optimal tort system, we conclude that an optimal tax remittance regime requires that tax liabilities be assigned so as to minimize the overall social costs of compliance and administration for a given level of achievement of the tax law’s desired distributional and revenue goals. This will sometimes mean assigning tax remittance responsibility to the lowest-compliance-cost remitter, and other times not – if that party happens also to be the lowest-cost liability avoider (the party best able to evade the tax). This comparison of tax remittance responsibility and tort remittance responsibility produces a number of positive and normative insights. For example, it helps to explain why the remittance responsibility for the retail sales tax lies primarily with the sellers rather than the buyers, as well as why we have wage withholding for the income tax. And it helps to explain some existing types of non-wage withholding, such as withholding on payments to foreign taxpayers. This framework also supports a number of reforms in the current U.S. regime for tax enforcement such as expanding the withholding requirement to payments made to independent contractors, which are a type of payment that currently contributes significantly to the overall U.S. federal tax gap

The Economics of Corporate Tax Selfishness

This paper offers an economics perspective on corporate tax noncompliance. It first reviews what is known about the extent and nature of corporate tax noncompliance and the resources devoted to enforcement. It then addresses the supply of corporate noncompliance -- the industrial organization of the tax shelter industry -- as well as the demand for corporate tax noncompliance, focusing on how the standard Allingham-Sandmo approach needs to be modified when applied to public corporations. It then discusses the implications of a supply-and-demand approach for the analysis of the incidence and efficiency cost of corporate income taxation, and the very justification for a separate tax on corporation income. Along the way it addresses policy proposals aimed at increased disclosure of corporate tax activities to both the IRS and to the public.http://deepblue.lib.umich.edu/bitstream/2027.42/39178/1/918.pd

Taxation and Big Brother: Information, Personalization, and Privacy in 21st Century Tax Policy

The transmission and processing of information is at the core of taxation, and one of the great ongoing technological resolutions has been in information technology. Looking forward ten, twenty, or thirty years, what are the implications of technological advancements for tax policy? How will, and how should, tax policy be different twenty years from now than it is today? This paper argues that, although the new technology greatly facilitates the use of taxpayer information to create a personalized tax system, there are forces pushing the tax system in the opposite direction, toward a radically depersonalized tax system, partly out of concern over the infringement on privacy of the information.http://deepblue.lib.umich.edu/bitstream/2027.42/39144/1/1022.pd