Sales Tax Not Included: Designing Commodity Taxes for Inattentive Consumers

Details

Author(s):
  • Jacob Goldin
Publish Date:
October 1, 2012
Publication Title:
Yale Law Journal
Format:
Journal Article
Citation(s):
  • Jacob Goldin, Sales Tax Not Included: Designing Commodity Taxes for Inattentive Consumers, 122 Yale Law Journal 258 (2012) (Note).

Abstract

A spate of new research suggests that the salience of a tax dramatically shapes taxpayer behavior: the more salient a tax—i.e., the more prominent a good’s after-tax price—the more taxpayers respond. Policymakers make decisions about tax salience, whether they intend to or not, every time they impose a new tax, yet the normative implications of those decisions remain poorly understood. This Note derives new guidelines for how policymakers can manipulate tax salience to promote efficiency. In particular, I show how levying a combination of high- and low-salience taxes can raise consumer welfare and further other social goals.