Testing taxpayers' cognitive abilities - Survey-based evidence

Nima Massarrat-Mashhadi () and Christian Sielaff ()
Additional contact information
Nima Massarrat-Mashhadi: Freie Universitaet Berlin, Department of Finance, Accounting and Taxation, Garystraße 21, 14195 Berlin, Germany
Christian Sielaff: Freie Universitaet Berlin, Department of Finance, Accounting and Taxation, Garystraße 21, 14195 Berlin, Germany

International Journal of Business and Economic Sciences Applied Research (IJBESAR), 2012, vol. 5, issue 1, 7-22

Abstract: Our paper assesses the accuracy of individuals' tax perceptions. Based on personal interviews, we aim to find out how tax complexity affects the capability of respondents to calculate income tax liability. Tax complexity is measured by interacting multiple tax rates, applied to one or more tax bases. Empirical results question the traditional view of taxpayers having a comprehensive understanding of taxation rules. Our findings support the view that increasing complexity affects the capability of taxpayers to accurately calculate income tax liability. For tax policy, there is also a need to determine how taxpayers erroneously deviate in terms of extent and direction, when facing increasing tax complexity. Our research design allows us to analyze extent and possible direction of the calculation bias. Approximating an empirical distribution of erroneous calculated effective tax rates could be helpful to design a more effective income tax system.

Keywords: Tax Complexity; Survey Data; Estimated Tax Rates (search for similar items in EconPapers)
JEL-codes: C83 H21 H24 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://ijbesar.af.duth.gr/docs/volume5_issue1/cognitive_abilities.pdf (application/pdf)
https://ijbesar.af.duth.gr/volume5_issue1.php (text/html)

Related works:
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:tei:journl:v:5:y:2012:i:1:p:7-22

Access Statistics for this article

International Journal of Business and Economic Sciences Applied Research (IJBESAR) is currently edited by Christos Grose and Persefoni Polychronidou

More articles in International Journal of Business and Economic Sciences Applied Research (IJBESAR) from Democritus University of Thrace (DUTH), Kavala Campus, Greece Contact information at EDIRC.
Bibliographic data for series maintained by Kostas Stergidis ().