TaxProf Blog

jonathan h choi (Minnesota; Academic google) presents Subjective Costs of Taxation in Florida today as part of his Marshall M. Criser Distinguished Faculty Workshop:

This article introduces and estimates the “subjective costs” of tax compliance, which are costs of tax compliance that people directly and individually experience. To measure these costs, we conducted a survey experiment to assess how much taxpayers would pay to reduce the hassles associated with filing a tax return. The experiment revealed that taxpayers are more concerned about inadvertent errors on their tax returns than time spent on compliance. Respondents also placed significant value on removing all tax compliance work; they essentially attached no value to marginal time savings. Also, eliminate tax compliance time for high-income taxpayers and taxpayers with complex returns is not worth much more than eliminating tax compliance time for low-income taxpayers with simple returns.

These findings have important implications for theory and policy. From a theoretical perspective, the results of this survey question the almost universal practice of using market wages to monetize the time people spend on tax compliance work. In fact, our results suggest that people value their time in tax compliance at a much lower rate than their hourly wage. Regarding policy, these findings advise policymakers to think big when it comes to reducing tax compliance costs, focus on simplifications that reduce errors rather than simply save time, and prioritize reforms that affect taxpayers. low income.

https://taxprof.typepad.com/taxprof_blog/2023/01/choi-presents-subjective-costs-of-taxation-today-at-florida.html