TY - JOUR

T1 - Advancing the Study of Tax Complexity with the Usability Model

AU - Pedersen, Frank Høgholm

PY - 2012

Y1 - 2012

N2 - Taxpayers, business employees, and tax professionals perform various tax compliance tasks, such as finding relevant information, filling out forms, and performing computations – perhaps with the help of tax-preparation software. Carrying out such activities can result in defrayed cost, time consumption, uncertainty, frustration, and the like. The resulting resource-spending, level of psychological well-being, and degree of achievement in completing the attempted compliance tasks have welfare implications. Improvements in taxpayers’ welfare relating to compliance tasks are about amelioration of negative occurrences as taxpayers carry out their compliance tasks. It follows that the more thoroughly taxpayers’ encounters are analyzed, the more effectively policymakers can work toward mitigation of unwanted occurrences such as taxpayer frustration. This Article introduces the usability model as a tool for such analysis. Usability is a well-established theoretical model for analyzing human performance of tasks, but it is a novel concept in the legal context. At the heart of usability is recognition of people’s desire to experience positive feelings of success, competence, and mastery in the performance of tasks. As a tax policy objective, usability emphasizes taxpayers’ aspiration to work smoothly as they perform the activities necessary to determine their tax liability. Because usability goes beyond economic cost to measure degrees of task accomplishment and psychological well-being in response to task performance, analyses based on usability are wider-ranging than those based on the compliance cost concept. The current literature is generally limited in using the term “tax complexity” to describe both tax rules and the way compliance tasks are carried out. This Article demonstrates that “complexity” is too narrow because it focuses on tax rules in isolation from the ways taxpayers actually carry out their compliance tasks. In addition, current notions of tax complexity are insufficient to provide guidance to policymakers because those notions are too vague in establishing which kind of taxpayer occurrences they embrace. Still, examination of the diverging current notions of tax complexity facilitates a more complete understanding of the field of tax complexity. Therefore, this Article discusses how various existing complexity concepts for assessment, such as compliance cost, relate to each other by identifying the issues each of them addresses, as well as how those issues are encompassed by the usability model. This helps to clarify why policymakers planning improvement initiatives would gain more traction by reasoning along the lines of usability, rather than attempting to apply vaguely-defined notions of complexity.

AB - Taxpayers, business employees, and tax professionals perform various tax compliance tasks, such as finding relevant information, filling out forms, and performing computations – perhaps with the help of tax-preparation software. Carrying out such activities can result in defrayed cost, time consumption, uncertainty, frustration, and the like. The resulting resource-spending, level of psychological well-being, and degree of achievement in completing the attempted compliance tasks have welfare implications. Improvements in taxpayers’ welfare relating to compliance tasks are about amelioration of negative occurrences as taxpayers carry out their compliance tasks. It follows that the more thoroughly taxpayers’ encounters are analyzed, the more effectively policymakers can work toward mitigation of unwanted occurrences such as taxpayer frustration. This Article introduces the usability model as a tool for such analysis. Usability is a well-established theoretical model for analyzing human performance of tasks, but it is a novel concept in the legal context. At the heart of usability is recognition of people’s desire to experience positive feelings of success, competence, and mastery in the performance of tasks. As a tax policy objective, usability emphasizes taxpayers’ aspiration to work smoothly as they perform the activities necessary to determine their tax liability. Because usability goes beyond economic cost to measure degrees of task accomplishment and psychological well-being in response to task performance, analyses based on usability are wider-ranging than those based on the compliance cost concept. The current literature is generally limited in using the term “tax complexity” to describe both tax rules and the way compliance tasks are carried out. This Article demonstrates that “complexity” is too narrow because it focuses on tax rules in isolation from the ways taxpayers actually carry out their compliance tasks. In addition, current notions of tax complexity are insufficient to provide guidance to policymakers because those notions are too vague in establishing which kind of taxpayer occurrences they embrace. Still, examination of the diverging current notions of tax complexity facilitates a more complete understanding of the field of tax complexity. Therefore, this Article discusses how various existing complexity concepts for assessment, such as compliance cost, relate to each other by identifying the issues each of them addresses, as well as how those issues are encompassed by the usability model. This helps to clarify why policymakers planning improvement initiatives would gain more traction by reasoning along the lines of usability, rather than attempting to apply vaguely-defined notions of complexity.

M3 - Journal article

VL - XII

SP - 282

EP - 361

JO - Houston Business and Tax Law Journal

JF - Houston Business and Tax Law Journal

SN - 1543-2602

IS - 2

ER -