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- Title
E-ZTAX: TAX SALIENCE AND TAX RATES.
- Authors
Finkelstein, Amy
- Abstract
This paper examines whether the salience of a tax system affects equilibrium tax rates. I analyze how tolls change after toll facilities adopt electronic toll collection (ETC); drivers are substantially less aware of tolls paid electronically. I estimate that, in steady state, tolls are 20 to 40 percent higher than they would have been without ETC. Consistent with a salience-based explanation for this toll increase, I find that under ETC, driving becomes less elastic with respect to the toll and toll setting becomes less sensitive to the electoral calendar. Alternative explanations appear unlikely to be able to explain the findings.
- Subjects
TAX rates; PUBLIC finance; INCOME tax; PROGRESSIVE taxation; TOLLS; INTERNAL revenue; VALUE-added tax; SALES tax; ECONOMICS
- Publication
Quarterly Journal of Economics, 2009, Vol 124, Issue 3, p969
- ISSN
0033-5533
- Publication type
Article
- DOI
10.1162/qjec.2009.124.3.969