Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/175423
Authors: 
Blaufus, Kay
Milde, Michael
Year of Publication: 
2018
Series/Report no.: 
arqus Discussion Paper No. 225
Publisher: 
Arbeitskreis Quantitative Steuerlehre (arqus), Berlin
Abstract: 
Using a series of laboratory experiments, this paper studies the effect of tax misperceptions on retirement savings and examines whether informational tax nudges and changing the form of the tax subsidy promote tax-efficient savings behavior. We find that deferred pension taxation results in after-tax pensions that are approximately 25% lower compared to an economically equivalent immediate pension tax system. This indicates substantial tax misperceptions. For subjects with low tax and financial knowledge, these misperceptions remain stable even if they have gained experience. Only if we provide subjects with recurrent numerical informational nudges on tax refunds, together with numerical informational nudges on future pension taxes, do tax distortions disappear for all subjects. Regarding the form of the tax subsidy, we demonstrate that replacing the tax deductibility of retirement savings with matching contributions increases tax-efficiency without the need to provide informational tax nudges.
Subjects: 
Pension Taxation
Tax Misperception
Learning Behavior
Informational Tax Nudges
Matching Contribution
JEL: 
D91
G4
H20
H30
Document Type: 
Working Paper

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