Taxpayer Confusion: Evidence from the Child Tax Credit

Feldman, Naomi E.; Katuscak, Peter; Kawano, Laura

doi:10.1257/aer.20131189

Cited by 96 publications

(44 citation statements)

References 63 publications

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“…A recent natural experiment used administrative data to show that taxpayers are often confused by complex tax systems (Feldman et al ., ). This study, conducted in the USA, analyses labour responses to the loss of Child Tax Credit when a household's child turns 17.…”

Section: Review Of Tax Experimentsmentioning

confidence: 97%

From the Lab to the Field: A Review of Tax Experiments

Mascagni¹

2017

Journal of Economic Surveys

149

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Tax experiments have been gaining momentum in recent years, although this literature dates back several decades. With new developments in methods and data availability, tax experiments have gradually moved away from lab settings and towards the field. This movement from the lab to the field has happened against the background of the ‘credibility revolution’ in applied economics, which has seen more rigorous methods applied to policy relevant questions, and of the availability to researchers of administrative data from tax returns. These developments have allowed significant advances in the experimental literature on tax compliance. This paper reviews this literature, giving particular attention to field experiments using administrative data, but putting them in the broader context of the compliance literature. A particular effort is made to take a global perspective, in a literature that is only recently seeing the emergence of evidence from Africa, Latin America and Asia.

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Section: Review Of Tax Experimentsmentioning

confidence: 97%

From the Lab to the Field: A Review of Tax Experiments

Mascagni¹

2017

Journal of Economic Surveys

149

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“…For example, if the biases arise from the misperception of taxes so that τ b,h =τ − τ s,h , then perceived taxes τ s,h could be estimated by comparing consumption behavior in the environment under consideration where taxes might not be fully salient to consumption behavior in an environment where taxes are very salient (see e.g. Chetty, Looney and Kroft (2009), Allcott, Mullainathan and Taubinsky (2014), and Feldman, Katuscak and Kawano (2016)). We flesh out the details regarding the implementation of this strategy in the quantitative illustration at the end of Section 3.1.…”

Section: Measurementmentioning

confidence: 99%

“…where v w is the marginal utility of a dollar received lump-sum. 58 If the agent works too much-perhaps because he underperceives taxes (see Feldman, Katuscak and Kawano (2016) for recent evidence on confusion about marginal tax rates) or overperceives the benefits of working-then τ b is positive. We also define the renormalized behavioral wedge τ b (z) = g (z) τ b (z).…”

Section: Endogenous Attention and Saliencementioning

confidence: 99%

Optimal Taxation with Behavioral Agents

Farhi

Gabaix

2020

American Economic Review

184

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This paper develops a theory of optimal taxation with behavioral agents. We use a general behavioral framework that encompasses a wide range of behavioral biases such as misperceptions, internalities and mental accounting. We revisit the three pillars of optimal taxation: Ramsey (linear commodity taxation to raise revenues and redistribute), Pigou (linear commodity taxation to correct externalities) and Mirrlees (nonlinear income taxation). We show how the canonical optimal tax formulas are modified and lead to a rich set of novel economic insights. We also show how to incorporate nudges in the optimal taxation frameworks, and jointly characterize optimal taxes and nudges. We explore the Diamond-Mirrlees productive efficiency result and the Atkinson-Stiglitz uniform commodity taxation proposition, and find that they are more likely to fail with behavioral agents. AbstractThis paper develops a theory of optimal taxation with behavioral agents. We use a general behavioral framework that encompasses a wide range of behavioral biases such as misperceptions, internalities and mental accounting. We revisit the three pillars of optimal taxation: Ramsey (linear commodity taxation to raise revenues and redistribute), Pigou (linear commodity taxation to correct externalities) and Mirrlees (nonlinear income taxation). We show how the canonical optimal tax formulas are modified and lead to a rich set of novel economic insights. We also show how to incorporate nudges in the optimal taxation frameworks, and jointly characterize optimal taxes and nudges. We explore the Diamond-Mirrlees productive efficiency result and the Atkinson-Stiglitz uniform commodity taxation proposition, and find that they are more likely to fail with behavioral agents. (JEL: D03, H21).

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“…Just like in the Ramsey model, we define the "behavioral wedge" τ b (z) = − (1−T (z))uc(c,z)+uz (c,z) vw , where v w is the marginal utility of a dollar received lump-sum. 58 If the agent works too much-perhaps because he underperceives taxes (see Feldman, Katuscak and Kawano (2016) for recent evidence on confusion about marginal tax rates) or overperceives the benefits of working-then τ b is positive. We also define the renormalized behavioral wedge τ b (z) = g (z) τ b (z).…”

Section: Setupmentioning

confidence: 99%

Optimal Taxation with Behavioral Agents

Farhi¹,

Gabaix²

2015

105

153

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thanks INET, the NSF (SES-1325181) and the Sloan Foundation for support. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

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Taxpayer Confusion: Evidence from the Child Tax Credit

Cited by 96 publications

References 63 publications

From the Lab to the Field: A Review of Tax Experiments

From the Lab to the Field: A Review of Tax Experiments

Optimal Taxation with Behavioral Agents

Optimal Taxation with Behavioral Agents

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