We study if taxpayers are loss averse when ﬁling returns. Preliminary deﬁcits might be viewed as losses assuming zero preliminary balances as reference points. Swedish taxpayers can to try to escape such losses by claiming deductions after receiving information about the preliminary balance. Using a regression kink and discontinuity approach, we study data for 3.6 million Swedish taxpayers for 2006.
There are strong causal effects of preliminary tax deﬁcits on the robability of claiming deductions.
Compliance will increase and auditing costs will be reduced if preliminary taxes are calibrated so that most tax payers receive refunds.
Per Engstrom - Katarina Nordblom - Henry Ohlsson - Annika Persson#behavioraleconomics