EconPapers    
Economics at your fingertips  
 

Rational choice of itemized deductions

Matthias Wrede ()

No 01/2013, FAU Discussion Papers in Economics from Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics

Abstract: This paper analyzes the effect of standard deductions on itemized deductions. Using German income tax data, it shows that the distribution of itemized deductions above the level of the standard deduction is positively skewed, with the mode lying somewhat above the standard deduction. This pattern of claimed tax allowable expenses could be easily explained by the rational minimization of tax payments in excess of the costs of reporting these deductions. An alternative explanation, namely tax aversion, is unable to replicate this pattern, as tax aversion would predict bunching of taxpayers directly above the lump-sum deduction.

Keywords: tax compliance; tax allowable expenses; itemized deductions; simplification (search for similar items in EconPapers)
JEL-codes: H24 H26 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-acc and nep-pbe
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/70766/1/736672680.pdf (application/pdf)

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:zbw:iwqwdp:012013

Access Statistics for this paper

More papers in FAU Discussion Papers in Economics from Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().

 
Page updated 2019-12-18
Handle: RePEc:zbw:iwqwdp:012013