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The Salience of Complex Tax Changes: Evidence From the Child and Dependent Care Credit Expansion

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  • Benjamin M. Miller
  • Kevin J. Mumford

Abstract

The literature on tax salience finds taxpayers are less responsive to the financial implications of a low-salience tax change than to an otherwise equivalent price change. This paper adds to this literature by showing that taxpayers are more responsive to the more salient features of a given complex tax change. Data from the Consumer Expenditure Survey are used to show that taxpayers responded to the direct implications of the 2003 expansion of the Child and Dependent Care Credit, but did not respond to the expansion’s less salient interactions with other elements of the tax code.

Suggested Citation

  • Benjamin M. Miller & Kevin J. Mumford, 2015. "The Salience of Complex Tax Changes: Evidence From the Child and Dependent Care Credit Expansion," National Tax Journal, National Tax Association;National Tax Journal, vol. 68(3), pages 477-510, September.
    • Handle: RePEc:ntj:journl:v:68:y:2015:i:3:p:477-510
    DOI: 10.17310/ntj.2015.3.01
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    Cited by:

    1. Alex Rees-Jones & Dmitry Taubinsky, 2020. "Measuring “Schmeduling”," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 87(5), pages 2399-2438.
    2. Gabrielle Pepin, 2022. "How Would a Permanently Refundable Child and Dependent Care Credit Affect Eligibility, Benefits, and Incentives?," Public Finance Review, , vol. 50(1), pages 33-61, January.
    3. Marianne Laurin & Derek Messacar & Pierre-Carl Michaud, 2021. "Financial Literacy and the Timing of Tax-Preferred Savings Account Withdrawals," CIRANO Working Papers 2021s-36, CIRANO.
    4. Alex Rees-Jones & Dmitry Taubinsky, 2018. "Taxing Humans: Pitfalls of the Mechanism Design Approach and Potential Resolutions," Tax Policy and the Economy, University of Chicago Press, vol. 32(1), pages 107-133.
    5. Ross Hickey & Bradley Minaker & A. Abigail Payne, 2019. "The Sensitivity of Charitable Giving to the Timing and Salience of Tax Credits," National Tax Journal, National Tax Association;National Tax Journal, vol. 72(1), pages 79-110, March.
    6. Gabrielle Pepin, 2020. "The Effects of Child Care Subsidies on Paid Child Care Participation and Labor Market Outcomes: Evidence from the Child and Dependent Care Credit," Upjohn Working Papers 20-331, W.E. Upjohn Institute for Employment Research.
    7. Gabrielle Pepin, 2021. "The COVID-19 Pandemic's Evolving Impacts on the Labor Market: Who's Been Hurt and What We Should Do," Upjohn Working Papers 21-344, W.E. Upjohn Institute for Employment Research.
    8. Freiberg Tracey, 2023. "Families first: A comparative study of company responses to paid care leave programs in the COVID-19 pandemic," IZA Journal of Labor Policy, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 13(1), pages 1-47, January.
    9. Burlacu, Sergiu & Mani, Anandi & Ronzani, Piero & Savadori, Lucia, 2023. "The preoccupied parent," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 105(C).
    10. Jane G. Gravelle & Sean Lowry, 2016. "The Affordable Care Act, Labor Supply, and Social Welfare," National Tax Journal, National Tax Association;National Tax Journal, vol. 69(4), pages 863-882, December.

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