Is Knowledge of the Tax Law Socially Desirable?
David A. Weisbach
University of Chicago - Law School; Center for Robust Decisionmaking on Climate & Energy Policy (RDCEP)
U of Chicago Law & Economics, Olin Working Paper No. 563
This paper considers whether knowledge of the tax law is socially desirable. Unlike other laws, which most often attempt to channel behavior, revenue raising taxes attempt to avoid changing behavior, so it is not obvious whether or when knowledge of the tax law is desirable. I argue that whether knowledge of the tax law is desirable depends on three factors: expectations about the tax in the absence of knowledge, the type of tax, and the quality of the tax. I then apply this to various policy decisions where knowledge of the tax law is a key variable, including the regulation of tax advisors, hidden taxes (such phase-outs of exemptions), and whether individual have the socially optimal incentive to seek knowledge of the tax law.
Number of Pages in PDF File: 43
Keywords: taxation, law, tax advice, uncertainty
JEL Classification: H20, H21, H26, K34
Date posted: July 26, 2011 ; Last revised: July 27, 2011