My Taxes are Too Darn High: Why Do Households Protest their Taxes?

Abstract

ZEW, Journees LAGV, LMU, RIDGE, and AEI. This project was reviewed and approved in advance by the Institutional Review Board at The University of Texas at Dallas. The experiments were registered in the AEA RCT Registry (#0005992). The original pre-registration was posted on May 24, 2020. However, after receiving interview requests from the media, we removed the pre-registration (we were concerned that the media would divulge the hypotheses listed in the pre-registration and thus contaminate the study). We re-posted the pre-registration on June 16, 2020, after the deadline to file a protest had passed (and before conducting any analysis of the data). After the study is accepted for publication, we will make all the code and data publicly available.

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“…To address this concern, we included a simple pre-treatment attention check at the beginning of the study (see p. 43 of the Online Appendix for a screenshot). 56% of our respondents passed the attention check, which is very low compared to many other experiments (e.g., 96.4% in Bottan andPerez-Truglia 2020 and99% in Nathan et al 2020). As shown in Section C of the Online Appendix, we also observe much lower data quality among inattentive respondents.…”

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“…To protest by mail, households who received a notification from the DCAD can use the protest form included with the notification, and households that did not receive a notification can file by mailing a printed form that can be obtained online on either the DCAD's or the Texas Comptroller's website. In 2020, about 75% of direct protests were filed online while the remaining 25% were filed by mail (Nathan et al, 2020 with what was expressed in our conversations with officials from some of the county appraisal districts in Texas. Their prevailing view is that households use the subjective nature of the appraisal process as an excuse to complain about their taxes being too high (for more details, see Nathan et al, 2020) and not necessarily to complain about the county's estimate of their home value.…”

“…In 2020, about 75% of direct protests were filed online while the remaining 25% were filed by mail (Nathan et al, 2020 with what was expressed in our conversations with officials from some of the county appraisal districts in Texas. Their prevailing view is that households use the subjective nature of the appraisal process as an excuse to complain about their taxes being too high (for more details, see Nathan et al, 2020) and not necessarily to complain about the county's estimate of their home value.…”

“…For example, some individuals may say that they are willing to pay more in taxes but would choose otherwise when facing real stakes. We study the willingness to pay taxes via revealed preferences, using households' decisions to file tax appeals (Nathan et al, 2020). Filing an appeal is a consequential action that households can take to reduce the amount they have to pay in property taxes.…”

“…We focus on this county primarily because, from a logistical perspective, it is more practical to implement a field experiment in a single location. However, as property taxes and tax appeals work similarly in most of the United States and in other countries around the world (Nathan et al, 2020;Dobay et al, 2019;World Bank, 2019), our experimental design could be easily replicated in other locations. Dallas County is the second-largest county in Texas, with an estimated population of about 2.6 million in 2020 (U.S. Census Bureau, 2021) -indeed, Dallas County has a larger population than 15 of the 50 U.S. states.…”