IDEAS home Printed from https://ideas.repec.org/p/hal/spmain/hal-04603450.html

Inattention and the Taxation Bias

Author

Listed:
  • Jérémy Boccanfuso

    (UNIBO - Alma Mater Studiorum Università di Bologna = University of Bologna)

  • Antoine Ferey

    (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper shows that inattention to taxes generates a time-inconsistency problem in the choice of tax policy, leading to higher taxes in equilibrium. These discretionary tax increases are inefficient as they are deviations from the socially optimal commitment policy. We call these deviations a taxation bias. Combining sufficient statistics and structural approaches, we quantify the magnitude of this policy distortion for the U.S. redistributive tax-transfer system. We find that the taxation bias ranges between 3 and 8 percentage points, alters tax-transfer progressivity, and has significant welfare effects. Overall, our findings shed new light on the implications of inattention and misperceptions.

Suggested Citation

  • Jérémy Boccanfuso & Antoine Ferey, 2023. "Inattention and the Taxation Bias," Sciences Po Economics Publications (main) hal-04603450, HAL.
    • Handle: RePEc:hal:spmain:hal-04603450
    DOI: 10.1093/jeea/jvad056
    Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-04603450v1
    as

    Download full text from publisher

    File URL: https://sciencespo.hal.science/hal-04603450v1/document
    Download Restriction: no
    File URL: https://libkey.io/10.1093/jeea/jvad056?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. is not listed on IDEAS
    2. Blesse, Sebastian & Buhlmann, Florian & Doerrenberg, Philipp, 2019. "Do people really want a simple tax system? Evidence on preferences towards income tax simplification," ZEW Discussion Papers 19-058, ZEW - Leibniz Centre for European Economic Research.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:spmain:hal-04603450. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Contact - Sciences Po Department of Economics (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.