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Tax Expenditure Salience

Tax Expenditure Salience We investigate taxpayer perceptions of two tax expenditures: the charitable deduction (CD) and the home mortgage interest deduction (HMID). Our survey evidence suggests widespread misperceptions regarding both programs' incentives. Almost half of eligible taxpayers are unaware of the CD's availability. Regarding the HMID, taxpayers err in both directions: many eligible taxpayers falsely believe themselves to be ineligible while even more ineligible taxpayers falsely believe themselves to be eligible. Eligible taxpayers tend to underestimate the magnitude of both tax subsidies. Our results provide important context for evaluating the effectiveness of the CD and HMID and shed light on potential reforms. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Law and Economics Review Oxford University Press

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Publisher
Oxford University Press
Copyright
The Author 2013. Published by Oxford University Press on behalf of the American Law and Economics Association. All rights reserved. For permissions, please e-mail: journals.permissionsoup.com.
Subject
Articles
ISSN
1465-7252
eISSN
1465-7260
DOI
10.1093/aler/aht014
Publisher site
See Article on Publisher Site

Abstract

We investigate taxpayer perceptions of two tax expenditures: the charitable deduction (CD) and the home mortgage interest deduction (HMID). Our survey evidence suggests widespread misperceptions regarding both programs' incentives. Almost half of eligible taxpayers are unaware of the CD's availability. Regarding the HMID, taxpayers err in both directions: many eligible taxpayers falsely believe themselves to be ineligible while even more ineligible taxpayers falsely believe themselves to be eligible. Eligible taxpayers tend to underestimate the magnitude of both tax subsidies. Our results provide important context for evaluating the effectiveness of the CD and HMID and shed light on potential reforms.

Journal

American Law and Economics ReviewOxford University Press

Published: Mar 20, 2014

Keywords: L38 R38 H20 H24 H31

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