Universität zu Köln

Fochmann, Martin and Hemmerich, Kristina (2018). Income Taxes and Risky Investment Decisions: An Experiment on Behavioral Tax Biases. J. Inst. Theor. Econ.-Z. Gesamte Staatswiss., 174 (4). S. 651 - 689. TUBINGEN: J C B MOHR. ISSN 1614-0559

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Abstract

We design a controlled experiment to examine investment behavior when a proportional income tax (with and without full loss offset) is introduced. Our design enables us to disentangle tax effects predicted by standard neoclassical theory and behavioral tax biases that cannot be predicted by this theory. We observe that investment behavior can be heavily distorted by behavioral tax biases and is consequently inconsistent with theoretical predictions. However, if we isolate these effects, we find support for the theory. We argue that the unpredicted behavior is a result of a tax-induced cognitive load variation.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Fochmann, Martin UNSPECIFIED UNSPECIFIED UNSPECIFIED Hemmerich, Kristina UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-164016
DOI:	10.1628/jite-2018-0002
Journal or Publication Title:	J. Inst. Theor. Econ.-Z. Gesamte Staatswiss.
Volume:	174
Number:	4
Page Range:	S. 651 - 689
Date:	2018
Publisher:	J C B MOHR
Place of Publication:	TUBINGEN
ISSN:	1614-0559
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language COGNITIVE-ABILITY; TAXATION; SALIENCE; RATES; PREFERENCES; ILLUSION; PERCEPTIONS; INCENTIVES; HYPOTHESIS; EXPERIENCE Multiple languages Economics Multiple languages
Refereed:	Yes
URI:	http://kups.ub.uni-koeln.de/id/eprint/16401