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Article Dans Une Revue (Article De Synthèse) Journal of the European Economic Association Année : 2023

Inattention and the Taxation Bias

Résumé

This paper shows that inattention to taxes generates a time-inconsistency problem in the choice of tax policy, leading to higher taxes in equilibrium. These discretionary tax increases are inefficient as they are deviations from the socially optimal commitment policy. We call these deviations a taxation bias. Combining sufficient statistics and structural approaches, we quantify the magnitude of this policy distortion for the U.S. redistributive tax-transfer system. We find that the taxation bias ranges between 3 and 8 percentage points, alters tax-transfer progressivity, and has significant welfare effects. Overall, our findings shed new light on the implications of inattention and misperceptions.
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Dates et versions

hal-04603450 , version 1 (06-06-2024)

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Jérémy Boccanfuso, Antoine Ferey. Inattention and the Taxation Bias. Journal of the European Economic Association, 2023, 66 p. ⟨10.1093/jeea/jvad056⟩. ⟨hal-04603450⟩
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