Policy and Complex Systems
Figure 1 : An example of the Stacey Matrix . Note that political decisions reside in the upper left ( low agreement / high certainty ) sector of the diagram .
Image credit : http :// www . qualityintegration . biz / img / 3430 . jpg .
simulate the iterative interactions of players in the tax compliance drama . These players include taxpayers , the tax authority , tax preparers , and employers who report income information to the authority ( Bloomquist , 2004 ; Bloomquist , 2006 ; Bloomquist , 2011 ). Tax compliance ABMs such as those of Bloomquist and others hold promise in that these simulations might reveal emergent properties within the tax compliance system . Understanding these emergent properties , in addition to understanding micro-level taxpayer behavior , can greatly benefit tax policymakers as they seek to design rules that maximize both revenue generation and the social welfare principles of the larger governmental structure . 3
Generally , the research focus for ABM designers is on developing models that explain how macro-level phenomena emerge from the micro-level interactions of individual agents ( Epstein & Axtell , 1996 ; Epstein , 2006 ). These models feature simple agents and only a few behavioral rules . They are considered “ valid ” representations of the phenomenon of interest if they can generate the real-world macro-level phenomenon or behavior observed in laboratory experiments or field studies ( Duffy , 2006 ). Yet , ABMs used for tax compliance purposes require greater detail ( Gillette , 2012 ). In addition to having detailed information about taxpayers ’
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Although most regard a tax authority ’ s principal mission to be revenue collection , some have made convincing arguments that countries like the United States have a tax authority with a dual mission : revenue collection and benefits administration . This second prong is evidenced by social welfare programs baked into the revenue laws , such as the earned income tax credit (“ EITC ”) available to low-income taxpayers . The National Taxpayer Advocate ( 2009 ; 2010 ) provides commentary on the U . S . tax authority ’ s dual mission .
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