Inattention and the Taxation Bias

Jérémy Boccanfuso and Antoine Ferey

No 2019-16, Working Papers from Center for Research in Economics and Statistics

Abstract: This paper studies how information frictions in agents’ tax perceptions affect the design of actual tax policy. Developing a positive theory of tax policy, we show that agents’ inattention interacts with policymaking and induces the government to implement inefficiently high tax rates: this is the taxation bias. We quantify the magnitude of this policy distortion for the US economy. Overall, our findings suggest that existing information frictions – and thereby tax complexity – lead to undesirable, large and regressive tax increases.

Keywords: Optimal taxation; inattention. (search for similar items in EconPapers)
JEL-codes: D90 H21 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2019-10-01
New Economics Papers: this item is included in nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Inattention and the Taxation Bias (2024)
Working Paper: Inattention and the Taxation Bias (2023)
Working Paper: Inattention and the Taxation Bias (2023)
Working Paper: Inattention and the Taxation Bias (2022)
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