How do wealth and income affect individuals' attitudes towards redistribution and taxation?

Working paper

How do wealth and income influence individual attitudes towards taxation and redistri- bution? We conduct a laboratory experiment in which we introduce random variation in participants’ earned income and endowed wealth, as well as in the information that they receive about their place in the distribution of income and wealth, and exam- ine how participants choose to tax each other’s income and wealth. We find strong evidence that exogenously higher income produces lower income tax preferences and exogenously higher wealth produces lower wealth tax preferences. However, there is minimal ‘bleed-over’ from income to wealth tax preferences or wealth to income tax preferences. Finally, we find that providing information about where people fit in the separate income and wealth distributions, as opposed to just their aggregate resources, heightens the importance of participants’ experimental income for income tax prefer- ences but has the reverse effect for their experimental wealth endowment on wealth tax preferences.

Authors: Ansell, B; Bokobza, L; Cansunar, A; Elkjaer, M; Markgraf, J

• Publication status: Not published
• Language: English
• Keywords: SBTMR