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American Economic Journal: Applied Economics: Vol. 5 No. 1 (January 2013)

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Teaching the Tax Code: Earnings Responses to an Experiment with EITC Recipients

Article Citation

Chetty, Raj, and Emmanuel Saez. 2013. "Teaching the Tax Code: Earnings Responses to an Experiment with EITC Recipients." American Economic Journal: Applied Economics, 5(1): 1-31.

DOI: 10.1257/app.5.1.1

Abstract

We conducted a randomized experiment with 43,000 EITC recipients at H&R Block. Tax preparers gave simple, personalized information about the EITC schedule to half of their clients. We find no significant effects of information provision on earnings in the subsequent year in the full sample. Further exploration uncovers evidence of heterogeneous treatment effects on both self-employment income and wage earnings across the 1,461 tax preparers involved in the experiment. Providing information about tax incentives does not systematically effect earnings on average. However, tax preparers may influence their clients' earnings decisions by providing advice about how to respond to tax incentives. (JEL H23, H24, H26, J23, J31)

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Authors

Chetty, Raj (Littauer Center, Harvard U)
Saez, Emmanuel (U CA, Berkeley)

JEL Classifications

H23: Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
H24: Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
H26: Tax Evasion
J23: Labor Demand
J31: Wage Level and Structure; Wage Differentials

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