Taxpayer Search for Information: Implications for Rational Attention

Forthcoming - American Economic Journal: Economic Policy

Fisher College of Business Working Paper No. RP 2014-02-004

97 Pages Posted: 3 Oct 2014

See all articles by Jeffrey L. Hoopes

Jeffrey L. Hoopes

University of North Carolina (UNC) at Chapel Hill - Accounting Area

Daniel Reck

London School of Economics & Political Science (LSE)

Joel B. Slemrod

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

Multiple version iconThere are 3 versions of this paper

Date Written: July 23, 2014

Abstract

We examine data on capital-gains-tax-related information search to determine when and how taxpayers acquire information. We find seasonal increases in information search around tax deadlines, suggesting that taxpayers seek information to comply with tax law. Positive correlations between stock market activity and search as well as year-end spikes in information search on capital losses when the market performs poorly suggest that taxpayers seek information for tax planning purposes. Policy changes and news events cause information search. 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 and Slemrod, Joel B., Taxpayer Search for Information: Implications for Rational Attention (July 23, 2014). Forthcoming - American Economic Journal: Economic Policy; Fisher College of Business Working Paper No. RP 2014-02-004. Available at SSRN: https://ssrn.com/abstract=2504001

Jeffrey L. Hoopes (Contact Author)

University of North Carolina (UNC) at Chapel Hill - Accounting Area ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States

Daniel Reck

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Joel B. Slemrod

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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