Publication

Virginia Tax Review

Volume

26

Page

1065

Year

2007

Abstract

Although most people recognize the necessity of taxes, few people like to pay them. Governments expend costs to collect taxes; people expend resources to avoid paying them, engaging in tax planning activities that are, for the most part, socially wasteful. The government knows that people will engage in such activities; a benevolent government aiming to maximize social welfare should take the costs of such activities into account when designing tax policy. Tax policy thus best maximizes social welfare if it limits taxpayers' costs incurred in developing and using methods to avoid or minimize taxes' while also limiting lost revenue. Our article develops two related normative corollaries of this insight.

Comments

Commentary on Victor Fleischer, Options Backdating, Tax Shelters, and Corporate Culture, 26 Virginia Tax Review 1031 (2007))

Reprinted in Monthly Digest of Tax Articles (2007)


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