Title: Optimal tax systems with endogenous behavioral biases
Abstract: We develop an optimal tax framework that combines two recent extensions of tax analysis: a tax-systems emphasis on non-rate policy instruments, and a recognition of the role of behavioral biases. Although the implications of taxpayers' biases for optimal tax rates have received considerable attention, a complete analysis of this aspect of optimal tax theory must account for the fact that such biases are often endogenous to the non-rate aspects of a tax system. We first generalize and extend the analysis of optimal tax systems to incorporate endogenous behavioral biases. We then develop a novel and important application of this issue, showing how misperception of the tax rate affects the optimal breadth of the tax base.
Publication Year: 2021
Publication Date: 2021-05-01
Language: en
Type: article
Indexed In: ['crossref']
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Cited By Count: 19
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