A Pilot Study of Uncertainty in Income Tax Forecasts

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Population Center Working Papers (PSC/PARC)
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income tax
Amazon Mechnical Turk (MTurk)
tax policy
Earned Income Tax Credit (EITC)
tax rates
Finance
Finance and Financial Management
Macroeconomics
Social and Behavioral Sciences
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The project described was initiated through the University of Pennsylvania QUARTET competition and is supported by the National Institute on Aging, Center on the Demography of Aging (P30 AG012836) and Center for Health Initiatives and Behavioral Economics the National Institutes of Health (NIA P30 AG034546), the Eunice Shriver Kennedy National Institute of Child Health and Development Population Dynamics Research Program (P2C HD044964); and the Boettner Center for Pensions and Retirement Security The content is solely the responsibility of the authors and does not necessarily represent the official views of the National Institutes of Health or the University of Pennsylvania.
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Abstract

How confidently can taxpayers forecast the tax bill that they will face? We asked survey respondents to provide both point estimates and subjective probability distributions of items from the tax return that they will submit the following April. In a pilot study, consisting of a sample of 188 participants from Amazon Mechanical Turk, we find evidence of substantial uncertainty over both the final tax and its determinants. We discuss the implications of this uncertainty for both tax policy and economic modeling.

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2018-10-15
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