Taxpayer Search for Information: Implications for Rational Attention

48 Pages Posted: 1 Sep 2013 Last revised: 23 Sep 2013

Jeffrey L. Hoopes

University of North Carolina (UNC) at Chapel Hill

Daniel H. Reck

University of California, Berkeley - Department of Economics

Joel B. Slemrod

University of Michigan, Stephen M. Ross School of Business; National Bureau of Economic Research (NBER)

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Date Written: September 17, 2013

Abstract

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.

Keywords: Information search, rational attention, capital gains taxation, tax complexity

JEL Classification: D80, D83, H31, H24

Suggested Citation

Hoopes, Jeffrey L. and Reck, Daniel H. and Slemrod, Joel B., Taxpayer Search for Information: Implications for Rational Attention (September 17, 2013). Ross School of Business Paper No. 1198. Available at SSRN: https://ssrn.com/abstract=2318581 or http://dx.doi.org/10.2139/ssrn.2318581

Jeffrey L. Hoopes

University of North Carolina (UNC) at Chapel Hill ( email )

102 Ridge Road
Chapel Hill, NC NC 27514
United States

Daniel H. Reck

University of California, Berkeley - Department of Economics ( email )

549 Evans Hall #3880
Berkeley, CA 94720-3880
United States

Joel B. Slemrod (Contact Author)

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Room R5396
Ann Arbor, MI 48109-1234
United States
734-936-3914 (Phone)
734-763-4032 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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