Taxpayer confusion: evidence from the child tax credit

Result code in IS VaVaI
<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F67985998%3A_____%2F16%3A00459206" target="_blank" >RIV/67985998:_____/16:00459206 - isvavai.cz</a>
Alternative codes found
RIV/00216208:11640/16:00468731 RIV/61384399:31150/16:00048091
Result on the web
<a href="http://dx.doi.org/10.1257/aer.20131189" target="_blank" >http://dx.doi.org/10.1257/aer.20131189</a>
DOI - Digital Object Identifier
<a href="http://dx.doi.org/10.1257/aer.20131189" target="_blank" >10.1257/aer.20131189</a>

Result language
angličtina
Original language name
Taxpayer confusion: evidence from the child tax credit
Original language description
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.
Czech name
—
Czech description
—

Type
J<sub>x</sub> - Unclassified - Peer-reviewed scientific article (Jimp, Jsc and Jost)
CEP classification
AH - Economics
OECD FORD branch
—

Project
<a href="/en/project/GBP402%2F12%2FG130" target="_blank" >GBP402/12/G130: The relationships between skills, schooling and labor market outcomes: A longitudinal study</a><br>
Continuities
I - Institucionalni podpora na dlouhodoby koncepcni rozvoj vyzkumne organizace

Publication year
2016
Confidentiality
S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

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