Perceptions of tax fairness along political ideologies
In this paper, Stefanie Stantcheva runs large scale online surveys and experiments on representative U.S. samples to elicit not only respondents’ factual knowledge about tax policy and the income or wealth distributions, but also their understanding of the mechanisms of tax policy and their reasoning about it. Her findings indicate:
- Respondents tend to think that high-income earners are more responsive to income taxes than middle class households, and that the main channels of response are increased tax evasion, higher likelihood of moving to a different state, and being less entrepreneurial;
- Republicans believe that taxes drive larger distortions in behavior, particularly with regards to reduced entrepreneurship and labor supply, whereas Democrats tend toward the opinion that income tax changes will not have as substantial of an effect;
- What also matters (negatively) for support for progressive taxation is the perception of trickle-down, i.e., the rhetoric that lower taxes on high-income earners can help everyone.
Understanding Tax Policy: How Do People Reason?
Author: Stefanie Stantcheva
From: Harvard University
Who protests against high taxes
Nathan and al., in this paper, use an interesting experiment to study household preferences for redistribution. They look at data from tax protests in the US and use experimental and quasi-experimental methods in order to provide evidence on the determinants of the decision to protest taxes. In particular, they look at data from Dallas County, Texas where in 2020, a total of 8.40% of households filed a protest of their property taxes on their own, and an additional 8.42% of households protested with the help of an agent, resulting in a total protest rate of 16.83%. They estimate that 49.4% of the protests in 2020 were successful and that these successful protests resulted, on average, in $601 in tax savings. The results from the field experiment suggest that:
- The average household displays conditional cooperation: when persuaded that the average tax rate in the county is higher, they become less likely to protest their own taxes. This effect is not only statistically significant, but also economically large;
- The current protest system may create undesired inequities: on one hand richer households protest more just because they stand to gain more from doing so. On the other hand, some groups such as racial and ethnic minorities, may have unequal access to protests if they find it more difficult to navigate the protest process.
They conclude by suggesting different kinds of aid that would enable racial and ethnic minorities to have equal access to tax protest which might lead to a fairer redistribution.
My Taxes are Too Darn High: Tax Protests as Revealed Preferences for Redistribution
Authors: Brad C. Nathan, Ricardo Perez-Truglia, Alejandro Zentner
From: University of Texas, Berkeley
