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Teaching the Tax Code: Earnings Responses to an Experiment with EITC Recipients

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  • Raj Chetty
  • Emmanuel Saez

Abstract

This paper tests whether providing information about the Earned Income Tax Credit (EITC) affects EITC recipients' earnings decisions. We conducted a randomized experiment with 43,000 EITC recipients at H&R Block in which tax preparers gave simple, personalized information about the EITC schedule to half of their clients. We find no significant effects of information provision on earnings in the subsequent year in the full sample. Further exploration uncovers evidence of heterogeneous treatment effects on both self-employment income and wage earnings across the 1,461 tax professionals who assisted the clients involved in the experiment. We conclude that providing information about tax incentives through tax preparers does not systematically affect earnings on average. However, tax preparers may be able to influence their clients' earnings decisions by providing advice about how to respond to tax incentives.

Suggested Citation

  • Raj Chetty & Emmanuel Saez, 2009. "Teaching the Tax Code: Earnings Responses to an Experiment with EITC Recipients," NBER Working Papers 14836, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:14836
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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