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Deregulation has played both the hero and the villain in recent years. This Article evaluates the impact of deregulation on what may be the single most economically important regulatory regime: the income tax. In order to accomplish this goal, it applies the concepts of fiscal arbitrage and compliance spirals to three deregulatory tax reforms. Compliance spirals describe an enforcement dynamic in which the regulator encourages compliance through a system of rewards for cooperation and punishment for noncooperation. Fiscal arbitrage describes policy measures that exploit cognitive biases and other anomalies to deliver political benefits by using minimal political capital. The combination of these two concepts creates a tool for tax authorities to evaluate deregulatory tax provisions for likely costs and benefits. On balance, this Article finds that tax deregulation is likely to be harmful.