Affiliation:
1. Economics Department, University of California, Santa Barbara, 2127 North Hall, Santa Barbara, CA 93106 and NBER (email: )
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 H24, H26, H31)
Publisher
American Economic Association
Subject
General Economics, Econometrics and Finance
Cited by
12 articles.
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