How Taxing Is Tax Filing? Using Revealed Preferences to Estimate Compliance Costs

Youssef Benzarti

No 23903, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper uses a quasi-experimental design and a novel identification strategy to estimate the cost of filing income taxes. First, using US income tax returns, I observe how taxpayers choose between itemizing deductions and claiming the standard deduction. Taxpayers forgo tax savings to avoid compliance costs, which provides a revealed preference estimate of the compliance cost of itemizing. I find that this cost increases with income, consistent with a higher opportunity cost of time for richer house- holds. Second, using my estimates and estimates of the time required to file other schedules, I estimate the cost of filing federal income taxes. I find that this cost has been increasing since the 1980’s and has reached 1.2% of GDP in the most recent years.

JEL-codes: H24 H31 H83 (search for similar items in EconPapers)
Date: 2017-10
New Economics Papers: this item is included in nep-cta, nep-iue, nep-pbe and nep-pub
Note: PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (25)

Published as Youssef Benzarti, 2020. "How Taxing Is Tax Filing? Using Revealed Preferences to Estimate Compliance Costs," American Economic Journal: Economic Policy, vol 12(4), pages 38-57.

Downloads: (external link)
http://www.nber.org/papers/w23903.pdf (application/pdf)

Related works:
Journal Article: How Taxing Is Tax Filing? Using Revealed Preferences to Estimate Compliance Costs (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:23903

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w23903

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().