Addressing Personal-Income-Tax Manipulation with Tools from Psychology
نویسنده
چکیده
To combat their aversion to paying taxes, many taxpayers can exercise some control over their tax bill. U.S. tax law includes a rich menu of tax-incentivized behaviors, including favorable treatment of mortgage interest, retirement savings, and charitable giving, among many other provisions. Through undertaking these actions, or through remembering to claim credits or deductions due for actions already taken, substantial legal tax reductions are possible. More insidiously, taxes may be illegally reduced through tax evasion. Tax manipulation decisions like these meaningfully affect federal revenue. Focusing on illegal evasion, the difference between the tax revenue that is believed to be due and the tax revenue that is actually collected typically exceeds $400 billion per year. When it comes to legal manipulation, recent work has documented that taxpayers often forgo substantial tax savings to avoid the hassle cost of itemizing their tax returns.1 In total, enormous sums of money are legally and illegally kept out of the tax collector’s hands every year, and even greater sums could be if taxpayers chose to do so. Improved understanding of the manipulationdecision-making process can provide tools to policymakers, as well as a means to better policy analysis. SUMMARY
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