Paul L. Caron

Monday, March 30, 2015

Thomas Presents User-Friendly Taxpaying Today at Indiana

Thomas (2015)Kathleen DeLaney Thomas (North Carolina) presents User-Friendly Taxpaying at Indiana today as part of its Tax Policy Colloquium hosted by Leandra Lederman:

Our income tax system is notoriously complex. The sheer volume of the tax code, along with the technical nature of its provisions, means that many individuals don’t fully understand the tax rules that apply to them. This Article refers to this type of tax complexity as “substantive complexity.” Although many commentators have argued for reforms that would simplify the substance of our tax laws, others have argued that substantive complexity is necessary if we want to tax each person according to his or her individual circumstances.

But there is another type of complexity embedded in our tax system that has been underexplored in the debate over simplification. Apart from the fact that the substance of our tax laws is confusing, our interactions with the tax system can also be incredibly tedious and burdensome. Even when taxpayers understand the relevant legal rules, complying with one’s tax obligations may still entail a complex process, such as spending hours entering information on returns, sifting through pages of instructions, or having to keep records of numerous expenses. This Article refers to this type of tax complexity as “procedural complexity.” Not only does procedural complexity impose enormous efficiency costs, it also deters voluntary participation in the tax system. When faced with the burden of accurately reporting their tax liability, many taxpayers may decide that complying is simply too much work. This tendency to avoid mental effort is supported by numerous behavioral studies.

This Article argues that policymakers could encourage better tax compliance by simplifying the process of paying taxes. For example, the IRS could allow taxpayers to easily record, access, and report their income and deductions online. Easing the burden of taxpaying should encourage more taxpayers to report honestly, in addition to reducing their compliance costs. In the same way that designing products or websites to be user-friendly encourages their use, making the tax system more user-friendly should attract more voluntary participation.


Leandra Lederman (Indiana-Bloomington), Margaret Ryznar (Indiana-Indianapolis), and Kathleen DeLaney Thomas (North Carolina)

Colloquia, Scholarship, Tax | Permalink