Various fallacies in thinking interfere with judgment about matters of tax. In particular, people may oppose or inconsistently support optimizing reforms --- or favor reforms that are less than optimal --- because of three clusters of cognitive biases. One, the status-quo effect, leads people to resist beneficial change: they are apt to weigh perceived losses more than foregone gains. Two, manipulation of the point of comparison affects how people perceive the advantages and disadvantages of reform proposals. Three, people underestimate or ignore various "unseen" elements of fiscal policy, such as imputed income and the incentive effects or opportunity costs of various tax and transfer programs.
We shall explore these effects in a series of experiments, some conducted on the World Wide Web and others conducted with other samples. We shall examine these effects in a wide range of realistic tax reform proposals, e.g., those concerned with taxes on married couples, hidden taxes, payroll taxes, consumption taxes, taxes on imputed income, pollution taxes, and taxes that substitute for private expenditures (such as those that pay for health care). Finally, we shall attempt to "debias" the effects of interest, and explore the transfer of training from one domain to another (in part by using samples of people who have already been trained in the economic theory of taxes).
