Taxpayer Search for Information: Implications for Rational Attention
Jeffrey L. Hoopes
Ohio State University (OSU) - Department of Accounting & Management Information Systems
Daniel H. Reck
University of Michigan at Ann Arbor - Department of Economics
Joel B. Slemrod
University of Michigan, Stephen M. Ross School of Business; National Bureau of Economic Research (NBER)
September 17, 2013
Ross School of Business Paper No. 1198
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 law. 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.
Number of Pages in PDF File: 48
Keywords: Information search, rational attention, capital gains taxation, tax complexity
JEL Classification: D80, D83, H31, H24
Date posted: September 1, 2013 ; Last revised: September 23, 2013
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