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Do Local Tax Preparers Strengthen the Influence of Tax Policy on Individual Behavior?

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  • Paul E. Madsen
  • Stephanie Walton

Abstract

One function of the tax code is to implement social policy, incentivizing taxpayers to make decisions policy makers believe to be desirable. However, the US tax code is complex and costly for taxpayers to understand and process. In this study, we hypothesize that tax preparers serve as information intermediaries between policy makers and taxpayers, reducing information frictions in the implementation of tax-based social policy. Our tests using geographical concentrations of tax preparers, changes in purchasing patterns for millions of tax-credit-eligible appliances, and speed of uptake of novel energy efficiency tax credits in millions of individual tax returns generally support our predictions.

Suggested Citation

  • Paul E. Madsen & Stephanie Walton, 2025. "Do Local Tax Preparers Strengthen the Influence of Tax Policy on Individual Behavior?," National Tax Journal, University of Chicago Press, vol. 78(3), pages 637-671.
    • Handle: RePEc:ucp:nattax:doi:10.1086/735400
    DOI: 10.1086/735400
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