Tax Knowledge and Tax Manipulation: A Unifying Model

Ashley Craig and Joel Slemrod

No 30151, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We provide a unified analysis of taxation and taxpayer education when individuals have an incomplete understanding of a complex tax system. The analysis is independent of whether income is earned legitimately, or by avoiding or evading taxes. In this sense, learning about tax minimization strategies (tax manipulation) is similar to learning about the tax code. The government in our model balances a trade-off: A better understanding of the tax system potentially allows taxpayers to optimize more effectively, but also affects government revenue. Optimal taxpayer education and the optimal amount of redistribution can both be characterized ex post by aggregate sufficient statistics that do not require information about how biases or behavioral responses vary across the decision margins.

JEL-codes: H2 H21 H26 (search for similar items in EconPapers)
Date: 2022-06
New Economics Papers: this item is included in nep-dem, nep-iue, nep-pbe and nep-pub
Note: PE
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Citations: View citations in EconPapers (6)

Published as Ashley C. Craig & Joel Slemrod, 2024. "Tax Knowledge and Tax Manipulation: A Unifying Model," Journal of Political Economy Microeconomics, vol 2(2), pages 298-334.

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Journal Article: Tax Knowledge and Tax Manipulation: A Unifying Model (2024)
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