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

Youssef Benzarti

American Economic Journal: Economic Policy, 2020, vol. 12, issue 4, 38-57

Abstract: This paper uses a quasi-experimental design to estimate the cost of filing taxes. Using US tax returns, I observe how taxpayers choose between itemizing deductions and claiming the standard deduction. Taxpayers forgo large tax savings to avoid compliance costs, which provides a revealed preference estimate of such costs. I show that costs increase with income, consistent with an opportunity cost of time explanation. These estimates suggest substantial costs of filing federal income taxes, significantly larger than previously estimated using surveys.

JEL-codes: H24 H26 H31 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (27)

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Working Paper: How Taxing Is Tax Filing? Using Revealed Preferences to Estimate Compliance Costs (2017)
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DOI: 10.1257/pol.20180664

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