How psychology can help inform tax policy to reduce tax liability and increase tax collection.
Episode Description
Loss aversion, a greatly researched psychological concept, plays into the way people think about the taxes they owe or that the government owes. Wharton Professor Alex Rees-Jones explains his research on feelings loss aversion among taxpayers and how these implications can inform tax policy.
EPISODE OVERVIEW Wharton professor Alex Rees-Jones discusses the psychological factors influencing tax behavior, including loss aversion. He explains how individuals are more motivated to minimize tax losses than to maximize gains, impacting tax compliance, deductions, and avoidance. Reese-Jones also highlights the broader implications of behavioral economics in tax policy, emphasizing the role of psychology in shaping financial decision-making and government revenue collection.
PODCAST OVERVIEW Every day, business scholars answer pressing questions in their research - but what do their insights mean for you? In this podcast, Wharton faculty dive into what inspired their studies and how their findings resonate with the world today. Learn how research insights translate into knowledge you can use, with host Dan Loney.
Learn more at http://whr.tn/rippleeffect.
#taxes #taxpolicy #policy #publicpolicy ----- The Wharton School of the University of Pennsylvania is committed to sharing its intellectual capital through Knowledge at Wharton, the school’s online business analysis journal.
Launched in 1999, Knowledge at Wharton offers free access to:
- Articles, podcasts, and videos highlighting Wharton faculty research and analysis of current business trends - Interviews with book authors from Wharton School Press - In-depth series of curated content like Wharton Executive Education’s Nano Tools for Leaders - A searchable database of more than 10,000 articles covering all aspects of business - A weekly newsletter that delivers Knowledge at Wharton insights directly to your inbox
Visit the Knowledge at Wharton homepage: https://whr.tn/3qUpSBE Subscribe to the Knowledge at Wharton YouTube channel: https://whr.tn/3DEAgAU
Brief Summary
Taxpayer motivation affects tax liability, with potential billion-dollar impacts on collections based on perceptions of gains and losses.
Key points
- Tax Liability Insights. Taxpayers facing losses reduce their liability more than those facing gains.
- Potential Tax Collection Increase. Changing taxpayer motivation could lead to a significant increase in tax collection.
- Reducing Tax Liability. Motivating taxpayers to avoid liability could significantly reduce overall tax revenue.
Ask about Knowledge at Wharton
Episode highlights
- Potential Tax Collection IncreaseChanging taxpayer motivation could lead to a significant increase in tax collection.“This could increase overall tax collection by about $1.4 billion.”0:19Mar 11, 2025
- Reducing Tax LiabilityMotivating taxpayers to avoid liability could significantly reduce overall tax revenue.“You could reduce tax liability by about $3.7 billion.”0:28Mar 11, 2025
