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Tax Expenditure Salience

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  • Jacob Goldin
  • Yair Listokin

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.

Suggested Citation

  • Jacob Goldin & Yair Listokin, 2014. "Tax Expenditure Salience," American Law and Economics Review, American Law and Economics Association, vol. 16(1), pages 144-176.
    • Handle: RePEc:oup:amlawe:v:16:y:2014:i:1:p:144-176.
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    File URL: http://hdl.handle.net/10.1093/aler/aht014
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    Cited by:

    1. Elizabeth Lyon & J. R. Catlin, 2020. "Consumer Misconceptions about Tax Laws: Results from a Survey in the United States," Journal of Consumer Policy, Springer, vol. 43(4), pages 807-828, December.
    2. COMANICIU Carmen, 2015. "Some Coordinates Regarding The Romanian Taxpayers Behavior," Revista Economica, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 67(1), pages 32-44, February.

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