The effect of tax complexity

• In Event: Tax Complexity and Tax Design

Abstract

Tax complexity is generally considered an essential element of tax policy analysis. This paper explores the effect of tax complexity. It begins by noting that the effect of tax complexity can only be observed if the level of tax complexity in the tax system is changed and all else remains constant. If anything else in addition to tax complexity also changes, then any observed effects cannot be definitively attributed to tax complexity. This paper asks what an exogenous change in tax complexity might be in practice and offers a theory which may help conceptualize exogenous changes in tax complexity. This paper then explores how the effects of changes to the tax system could be decomposed to isolate the part of the effect attributable to the change in tax complexity.

Author

• Daniel Schaffa, University of Richmond Law School