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Taxpayer confusion: evidence from the child tax credit
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SYSNO ASEP 0468731 Document Type J - Journal Article R&D Document Type Journal Article Subsidiary J Článek ve WOS Title Taxpayer confusion: evidence from the child tax credit Author(s) Feldman, N. E. (IL)
Katuščák, Peter (NHU-C) RID
Kawano, L. (US)Source Title American Economic Review - ISSN 0002-8282
Roč. 106, č. 3 (2016), s. 807-835Number of pages 29 s. Language eng - English Country US - United States Keywords economic stimulus payments ; real-effort experiment ; income-tax Subject RIV AH - Economics Institutional support NHU-C - PRVOUK-P23 UT WOS 000371277400010 EID SCOPUS 84960843508 DOI https://doi.org/10.1257/aer.20131189 Annotation We develop an empirical test for whether households understand or misperceive their marginal tax rate. Our identifying variation comes from the loss of the Child Tax Credit when a child turns 17. Using this age discontinuity, we find that despite this tax liability increase being lump-sum and predictable, households reduce their reported wage income upon discovering they have lost the credit. This finding suggests that households misinterpret at least part of this tax liability change as an increase in their marginal tax rate. This evidence supports the hypothesis that tax complexity can cause confusion and leads to unintended behavioral responses. Workplace NHU-C Contact Tomáš Pavela, pavela@cerge-ei.cz, Tel.: 224 005 122 Year of Publishing 2017
Number of the records: 1