Broken Tax Breaks? Evidence from a Tax Credit Information Experiment with 1,000,000 Students

45 Pages Posted: 18 Sep 2017

See all articles by Peter Bergman

Peter Bergman

Columbia University

Jeffrey T Denning

Brigham Young University, Department of Economics; IZA Institute of Labor Economics

Day Manoli

University of Texas at Austin

Abstract

There is increasing evidence that tax credits for college do not affect college enrollment. This may be because prospective students do not know about tax benefits for credits or because the design of tax credits is not conducive to affecting educational outcomes. We focus on changing the salience of tax benefits by providing information about tax benefits for college using a sample of over 1 million students or prospective students in Texas. We sent emails and letters to students that described tax benefits for college and tracked college outcomes. For all three of our samples – rising high school seniors, already enrolled students, and students who had previously applied to college but were not currently enrolled – information about tax benefits for college did not affect enrollment or reenrollment. We test whether effects vary according to information frames and found that no treatment arms changed student outcomes. We conclude that salience is not the primary reason that tax credits for college do not affect enrollment.

Keywords: tax benefits for college

JEL Classification: I22, I23, H2

Suggested Citation

Bergman, Peter and Denning, Jeffrey T and Manoli, Day, Broken Tax Breaks? Evidence from a Tax Credit Information Experiment with 1,000,000 Students. IZA Discussion Paper No. 10997, Available at SSRN: https://ssrn.com/abstract=3037903

Peter Bergman (Contact Author)

Columbia University ( email )

Jeffrey T Denning

Brigham Young University, Department of Economics ( email )

130 Faculty Office Bldg.
Provo, UT 84602-2363
United States

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Day Manoli

University of Texas at Austin ( email )

2317 Speedway
Austin, TX 78712
United States

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