Tax Simplicity and Heterogeneous Learning

P. Aghion, Ufuk Akcigit, Matthieu Lequien and Stefanie Stantcheva

Working papers from Banque de France

Abstract: We study how strongly individuals respond to tax simplicity and how they learn about the complexities of the tax system. We use new French tax returns data on the self-employed from 1994 to 2012. France has three fiscal regimes for the self-employed, which differ in their monetary tax incentives and in their tax simplicity. These regimes are subject to eligibility thresholds: we find large excess masses (bunching) right below the latter. The regimes impact different agents heterogeneously and have changed extensively over time. We estimate a large value for tax simplicity of up to 650 euros per year per individual. Tax complexity has sizable costs: agents are not immediately able to understand what the right regime choice is, leave significant money on the table, and learn over time. These costs are regressive , impacting more the uneducated, low income, and low skill agents.

Keywords: Taxation; personal income and business taxes; tax evasion; income elasticity. (search for similar items in EconPapers)
JEL-codes: H21 H24 H25 H26 (search for similar items in EconPapers)
Pages: 74 pages
Date: 2018
New Economics Papers: this item is included in nep-ict, nep-iue, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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https://publications.banque-france.fr/sites/defaul ... ocuments/wp665_0.pdf (application/pdf)

Related works:
Working Paper: Tax simplicity and heterogeneous learning (2017)
Working Paper: Tax Simplicity and Heterogeneous Learning (2017)
Working Paper: Tax simplicity and heterogeneous learning (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:665

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