Do you want to reform the tax system? Channel Dr. Freud.

So you want me to lie down on a couch, tell you about the dream I had last night, and listen to your theories about how I unconsciously hate my father. No, but Freud showed us how feelings and emotions affect our decisions and actions, a point that was not lost on Adam Smith and the other English classical economists.  For example, Smith wrote that every tax “ought to be levied at the same time, or in the same manner, in which it is most likely to be convenient for the contributor to pay it.”

John Stuart Mill also recognized how people’s feelings and emotions could make life hard for tax collectors. “An Englishman dislikes, not much the payment, as the act of paying. He dislikes seeing the face of the tax-collector, and being subject to his peremptory demand.” As University of Exeter economist Dr. Simon James wrote “Mill went on to suggest that if the level of taxation remained the same but indirect taxes were incorporated into direct taxation, ‘an extreme dissatisfaction’ would certainly arise…while men’s minds are so little guided by reason.”
Professor James cited Mills in a technical paper about how behavioral insights could improve tax policy, including making it easier for taxpayers to pay their taxes. The problem, James explained, is that Smith’s and Mill’s insights fell by the wayside as “economics came to replace the old discipline of Political Economy in the twentieth century….” 

Refocusing economics on behavioral science is one of the themes running through Dan Ariely’s popular Predictably Irrational: The Hidden Forces that Shape our Decisions (2009). Being irrational doesn’t mean we’re unpredictable. “Whether we are acting as consumers, businesspeople, or policy makers, understanding how we are predictably irrational provides a starting point for improving our decision making and changing the way we live for the better.”  Here’s a video of Ariely discussing the value of predictable irrationality: