David Gamage (UC-Berkeley) presents On Tax Salience: Market-Salience and Political Salience (with Darien Shanske (UC-Hastings)) at Loyola-L.A. today as part of its Tax Policy Colloquium Series.   The commentator is Sarah Lawsky (UC-Irvine). Here is part of the Introduction:

This Article analyzes the normative implications of tax salience. The Article argues that tax salience occurs on multiple dimensions. Tax instruments with low salience on one dimension may have high salience on other dimensions. In particular, the Article focuses on salience with respect to market and political decision making, which the Article labels as “market-salience” and “political-salience” respectively.

In analyzing market-salience, the Article concurs with other analyses that have concluded that, all else being equal, it is normatively desirable to reduce the market-salience of taxation. The Article discusses potential complications to this basic story such as taxpayers misallocating their budgets, distributional considerations, and externalities and pigouvian taxes. Although more empirical work needs to be done before we can confidently assess the impact of these factors, the Article tentatively concludes that none of these complications defeats the general story whereby reducing market-salience is normatively desirable. Instead, the main drawbacks to employing techniques for reducing market-salience are that these techniques can backfire if overused, due to factors like taxpayer learning and aversion to being manipulated. Overuse of techniques for reducing market-salience in a manner that triggers these limiting factors can undermine taxpayer confidence in the tax system, leading to a host of potentially undesirable behaviors.