Estimating Tax Agency Efficiency

Measuring Tax Efficiency: A Tax Optimality Index

This paper introduces an index of tax optimality that measures the distance of some current tax structure from the optimal tax structure in the presence of public goods. In doing so, we derive a [0, 1] number that reveals immediately how far the current tax configuration is from the optimal one and, thereby, the degree of efficiency of a tax system. We call this number the Tax Optimality Index....

Corporate Tax Evasion with Agency Costs

Estimating the Tax Benefits of Debt

n 1958, Nobel Laureates Franco Modigliani and Merton Miller published their famous irrelevance theorems.1 One implication from these theorems is that ers and the U.S. government. Panel A of Figure 1 shows that if the corporate tax rate is 33.3%, the government gets one-third of the pie for an all-equity firm, and stockholders get the remaining two-thirds. But if the firm chooses to finance with...

Estimating Equivalence Scales for Tax and Benefits

Transfer systems are often comprised of many tax and benefit schemes. The payments assigned to households by each of these schemes frequently depend upon characteristics such as the number, age, and health status of family members. While it is apparent that a value judgment underlies the relative treatment of different households, the nature of this judgment is not usually transparent due to th...

Common sense at the Swedish Tax Agency: Transactional boundaries that separate taxable and tax-free income

How does a tax collecting agency distinguish between taxable and tax-free income when the law says that all that all exchanges having value, regardless of compensation mode, are seen to constitute income? ‘‘By using our common sense’’ proposed one of the Swedish Tax Agency’s legal experts. Common sense is here used as a frame for the boundary work that the Agency engage in-based on legislation,...