Effects of predictable tax liability variation on household labor income

Kód výsledku v IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F00216208%3A11640%2F12%3A00389691" target="_blank" >RIV/00216208:11640/12:00389691 - isvavai.cz</a>

Výsledek na webu

<a href="http://www.cerge-ei.cz/pdf/wp/Wp454.pdf" target="_blank" >http://www.cerge-ei.cz/pdf/wp/Wp454.pdf</a>

DOI - Digital Object Identifier

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Jazyk výsledku

angličtina

Název v původním jazyce

Effects of predictable tax liability variation on household labor income

Popis výsledku v původním jazyce

Economic theory assumes that taxpayers use their true marginal tax rate (MTR) to guide their economic decisions. However, due to complexity of the tax system, taxpayers may incorrectly perceive their MTR, with implications for incentives. We first develop an updating model that formalizes this conjecture. It predicts that an unexpected increase in the previous year's tax liability pushes up the perception of the MTR in the current year, even though the MTR does not, in fact, change. We then examine whether household labor income responds to predictable (but not necessarily predicted) lump-sum variation in the previous year's tax liability due to loss of eligibility for the Child Tax Credit when the eligible child turns 17. Using an identification strategy based on an eligibility discontinuity, we find that losing the credit reduces, ceteris paribus, parental labor income in the year following the loss of the credit. This result is robust to a variety of tests and different data sources

Název v anglickém jazyce

Effects of predictable tax liability variation on household labor income

Popis výsledku anglicky

Economic theory assumes that taxpayers use their true marginal tax rate (MTR) to guide their economic decisions. However, due to complexity of the tax system, taxpayers may incorrectly perceive their MTR, with implications for incentives. We first develop an updating model that formalizes this conjecture. It predicts that an unexpected increase in the previous year's tax liability pushes up the perception of the MTR in the current year, even though the MTR does not, in fact, change. We then examine whether household labor income responds to predictable (but not necessarily predicted) lump-sum variation in the previous year's tax liability due to loss of eligibility for the Child Tax Credit when the eligible child turns 17. Using an identification strategy based on an eligibility discontinuity, we find that losing the credit reduces, ceteris paribus, parental labor income in the year following the loss of the credit. This result is robust to a variety of tests and different data sources

Druh

O - Ostatní výsledky

CEP obor

AH - Ekonomie

OECD FORD obor

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Projekt

<a href="/cs/project/GAP402%2F10%2F2085" target="_blank" >GAP402/10/2085: Nesprávné vnímání marginální daňové sazby</a><br>

Návaznosti

I - Institucionalni podpora na dlouhodoby koncepcni rozvoj vyzkumne organizace

Rok uplatnění

2012

Kód důvěrnosti údajů

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů