Child Benefits in the U.S. Federal Income Tax

2009 ◽  
Author(s):  
Kevin J. Mumford
Keyword(s):  
Income Tax ◽  
Child Benefits ◽  
Federal Income Tax ◽  
The U.S

Measuring “Schmeduling”

2019 ◽  
Vol 87 (5) ◽  
pp. 2399-2438 ◽  
Author(s):  
Alex Rees-Jones ◽  
Dmitry Taubinsky
Keyword(s):  
Income Tax ◽  
Mental Representations ◽  
Tax Rates ◽  
Marginal Tax Rate ◽  
Tax Rate ◽  
Policy Relevance ◽  
Marginal Tax Rates ◽  
Federal Income Tax ◽  
The U.S ◽  
Empirical Framework

Abstract What mental models do individuals use to approximate their tax schedule? Using incentivized forecasts of the U.S. Federal income tax schedule, we estimate the prevalence of the “schmeduling” heuristics for constructing mental representations of nonlinear incentive schemes. We find evidence of widespread reliance on the “ironing” heuristic, which linearizes the tax schedule using one’s average tax rate. In our preferred specification, 43% of the population irons. We find no evidence of reliance on the “spotlighting” heuristic, which linearizes the tax schedule using one’s marginal tax rate. We show that the presence of ironing rationalizes a number of empirical patterns in individuals’ perceptions of tax liability across the income distribution. Furthermore, while our empirical framework accommodates a rich class of other misperceptions, we find that a simple model including only ironers and correct forecasters accurately predicts average underestimation of marginal tax rates. We replicate our finding of prevalent ironing, and a lack of other systematic misperceptions, in a controlled experiment that studies real-stakes decisions across exogenously varied tax schedules. To illustrate the policy relevance of the ironing heuristic, we show that it augments the benefits of progressive taxation in a standard model of earnings choice. We quantify these benefits in a calibrated model of the U.S. tax system.

scholarly journals Where Has The Currency Gone? And Why? The Underground Economy And Personal Income Tax Evasion In The U.S., 1970-2008

2014 ◽  
Vol 6 (1) ◽  
pp. 36-52
Author(s):  
Richard J. Cebula
Keyword(s):  
Interest Rate ◽  
Tax Evasion ◽  
Income Tax ◽  
Tax Avoidance ◽  
Underground Economy ◽  
Personal Income ◽  
Personal Income Tax ◽  
Tax Returns ◽  
Federal Income Tax ◽  
The U.S

Unaccounted for currency in the U.S. is argued to reflect the presence of widespread income tax evasion. This empirical study seeks to identify determinants of the underground economy in the U.S. in the form of federal personal income tax evasion over the period 1970-2008. In this study, we use the most recent data available on personal income tax evasion, data that are derived from the General Currency Ratio Model and measured in the form of the ratio of unreported AGI (adjusted gross income) to reported AGI. Other studies of federal income tax evasion for the U.S. are dated and do not use data this current. It is found that personal income tax evasion was an increasing function of the maximum marginal federal personal income tax rate, the percentage of federal personal income tax returns characterized by itemized deductions, and unpopular military engagements, in this case, the War in Iraq, and a decreasing function of the Tax Reform Act of 1986 (during its first two years of being implemented), the ratio of the tax free interest rate yield on high grade municipals to the interest rate yield on ten year Treasury notes (as a measure of the incentive effect of a better return to tax avoidance, which is legal), and higher audit rates of filed federal income tax returns (as a measure of risk from tax evasion) by IRS personnel.

Are More Choices Better? An Experimental Investigation of the Effects of Multiple Tax Incentives

2016 ◽  
Vol 38 (2) ◽  
pp. 111-128 ◽  
Author(s):  
Donna D. Bobek ◽  
Jason C. Chen ◽  
Amy M. Hageman ◽  
Yu Tian
Keyword(s):  
Income Tax ◽  
Positive Emotions ◽  
Tax Incentives ◽  
Optimal Choice ◽  
Negative Consequences ◽  
Tax System ◽  
Federal Income Tax ◽  
Choice Complexity ◽  
Perceived Complexity ◽  
The U.S

ABSTRACT The U.S. federal income tax system includes numerous incentives intended to encourage many behaviors. However, these incentives add complexity. This study investigates how one source of complexity, the number of different incentives, affects individuals' use of tax incentives. The results from two experiments detect no evidence that having more (versus fewer) incentive choices (i.e., high choice complexity) affects individuals' decisions to engage in the targeted behavior or select an incentive. However, the results do show that individuals faced with high choice complexity are more likely to make errors and less likely to choose the optimal incentive. Further, high choice complexity leads to greater perceived complexity and difficulty, which, in turn, is related to less positive emotions and more anxiety. Thus, high choice complexity has negative consequences on individuals. This study also contributes to the choice complexity literature by examining its effect on making an optimal choice.

Observations from the U.S. Federal Income Tax to Distinguish Between Measures of Progressivity and Redistributive Capacity

2016 ◽  
Vol 14 (1) ◽  
pp. 11-35
Author(s):  
Timoty Mathews
Keyword(s):  
Income Tax ◽  
Federal Income Tax ◽  
The U.S

This study provides insights on the attributes of a tax that are measured by two different classes of progressivity indices – those defined by Kakwani (1977), Suits (1977), Stroup (2005), and Mathews (2016) and those defined by Musgrave & Thin (1948) and Reynolds & Smolensky (1977). Index values are determined for the U.S. Federal Income Tax from 1929 through 2010. These values illustrate that the indices of Kakwani, Suits, Stroup, and Mathews gauge the progressivity of the tax, while those of Musgrave & Thin and Reynolds & Smolensky measure the redistributive capacity of the tax. In the early 1940s the progressivity of this tax significantly decreased at the same time when the redistributive capacity of the tax significantly increased. Since the mid-1970s this tax has (i) been more progressive than it was from the early 1950s through the mid-1970s and (ii) redistributed income to a greater degree than it did from the early 1950s through the mid-1970s.

Sign in / Sign up

Export Citation Format

Share Document