Creating Failures in the Market for Tax Planning

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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

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关键词：failures Creating planning Failure eating tax planning market Creating failures