Rational choice of itemized deductions
This paper analyzes the effect of standard deductions on itemized deductions. Using German income tax data, it shows that the distribution of itemized deductions above the level of the standard deduction is positively skewed, with the mode lying somewhat above the standard deduction. This pattern of claimed tax allowable expenses could be easily explained by the rational minimization of tax payments in excess of the costs of reporting these deductions. An alternative explanation, namely tax aversion, is unable to replicate this pattern, as tax aversion would predict bunching of taxpayers directly above the lump-sum deduction.
|Date of creation:||2013|
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- Kirchler, Erich & Maciejovsky, Boris & Schneider, Friedrich, 2001.
"Everyday representations of tax avoidance, tax evasion, and tax flight: Do legal differences matter?,"
SFB 373 Discussion Papers
2001,43, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
- Kirchler, Erich & Maciejovsky, Boris & Schneider, Friedrich, 2003. "Everyday representations of tax avoidance, tax evasion, and tax flight: Do legal differences matter?," Journal of Economic Psychology, Elsevier, vol. 24(4), pages 535-553, August.
- Dilip Mookherjee & Ivan Png, 1989. "Optimal Auditing, Insurance, and Redistribution," The Quarterly Journal of Economics, Oxford University Press, vol. 104(2), pages 399-415.
- Martin Besfamille & Cecilia Parlatore Siritto, 2009.
"Modernization of Tax Administrations and Optimal Fiscal Policies,"
Journal of Public Economic Theory,
Association for Public Economic Theory, vol. 11(6), pages 897-926, December.
- Martin Besfamille & Cecilia Parlatore Siritto, 2009. "Modernization of Tax Administrations and Optimal Fiscal Policies," Department of Economics Working Papers 2009-07, Universidad Torcuato Di Tella.
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