Estimating Income Tax Salience

Dominic Coey

No 10-026, Discussion Papers from Stanford Institute for Economic Policy Research

Abstract: I develop a procedure for estimating how accurately people perceive their income tax schedules. Using Survey of Income and Program Participation data on hourly-paid workers, I reject the hypothesis of fully salient taxes. Younger workers seem particularly prone to misperceiving their taxes. Even for younger workers, however, the welfare losses associated with this less than full salience appear to be small.

Date: 2011-04
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