Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/70766
Authors: 
Wrede, Matthias
Year of Publication: 
2013
Series/Report no.: 
IWQW Discussion Paper Series 01/2013
Abstract: 
This paper analyzes the effect of standard deductions on itemized deductions. Using German income tax data, it shows that the distribution of itemized deductions above the level of the standard deduction is positively skewed, with the mode lying somewhat above the standard deduction. This pattern of claimed tax allowable expenses could be easily explained by the rational minimization of tax payments in excess of the costs of reporting these deductions. An alternative explanation, namely tax aversion, is unable to replicate this pattern, as tax aversion would predict bunching of taxpayers directly above the lump-sum deduction.
Subjects: 
tax compliance
tax allowable expenses
itemized deductions
simplification
JEL: 
H24
H26
Document Type: 
Working Paper

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