Experimental Evidence on Tax Preferences in Highly Unequal States

• In Event: Enforcement, Redistribution and Stateness

Abstract

Citizens in highly unequal countries often do not express a strong desire to soak the rich through redistributive taxes, but there is little understanding of why that is the case. This ambivalence is especially puzzling in Latin America, where demand for progressive taxation has been persistently low following the return to democracy despite endemic inequality. Many scholars argue that this is due to low expectations of reciprocity, or the expectation of receiving state goods in exchange for taxation. We challenge this literature, as it makes strong assumptions about how individuals naturally make the trade-off between that the state ‘gives’ in benefits and what it ‘gets’ from tax revenue. We examine fiscal preferences using original conjoint experiments from Colombia, Mexico, and Brazil – representing a closely controlled comparison between states varying welfare provision and tax structures. We then present an original, pre-registered survey experiment in Brazil, which indicates that considerations of benefits and the overall tax burden do not increase preferences for progressivity without an explicit linkage between taxation and welfare benefits.

Authors

• Cassilde Schwartz, Royal Holloway University of London

• Néstor Castañeda, University College London

• David Doyle, University of Oxford