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Taxpayer Search for Information: Implications for Rational Attention

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  • Jeffrey Hoopes
  • Daniel Reck
  • Joel Slemrod

Abstract

We examine novel data on searches for capital-gains-tax-related information to determine when and how taxpayers acquire information. We find strong seasonal increases in information search around tax filing deadlines, suggesting that taxpayers seek information to comply with tax laws. Positive correlations between stock market activity and information search and year-end spikes in information search on capital losses suggest that taxpayers seek information for tax planning purposes. Policy changes and news events cause noteworthy information search. Overall, these data suggest that taxpayers are not always fully informed, but that rational attention and exogenous shocks to tax salience drive taxpayer information search.

Suggested Citation

  • Jeffrey Hoopes & Daniel Reck & Joel Slemrod, 2013. "Taxpayer Search for Information: Implications for Rational Attention," NBER Working Papers 19482, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:19482
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    More about this item

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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