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Discriminatory Taxes are Unpopular Even when they are Efficient and Distributionally Fair

Sausgruber, Rupert and Tyran, Jean-Robert (2013) Discriminatory Taxes are Unpopular Even when they are Efficient and Distributionally Fair. WU International Taxation Research Paper Series, 2013-08. WU Vienna University of Economics and Business, Universität Wien, Vienna.

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Abstract

We explore the political acceptance of taxation in commodity markets. Participants in our experiment earn incomes by trading and must collectively choose one of two tax regimes to raise a given tax revenue. A "uniform tax" (UT) imposes the same tax rate on all markets and is fair in that it yields the same - but low - income to participants in all markets. The "discriminatory tax" (DT) imposes a higher burden on markets with inelastic demand and is therefore efficient but it is also unfair in that incomes are unequal across markets. We find that DT are unpopular, as predicted. Surprisingly, however, DT remain unpopular when they are both efficient and produce a fair (equal) distribution. We conclude that non-discrimination (equal treatment) is a salient fairness principle in taxation that shapes voting on commodity taxes above and beyond concerns for efficiency and equal distribution. (authors' abstract)

Item Type: Paper
Additional Information: Editors: Eva Eberhartinger, Michael Lang, Martin Zagler (Vienna University of Economics and Business), Erich Kirchler (University of Vienna) and Rupert Sausgruber (University of Innsbruck)
Keywords: behavioral public economics / voting / efficiency / fairness / Steuerrecht / Experimentaldesign / Markteffizienz / Fairness / Abstimmung
Classification Codes: RVK PP 3900, QM 236 ; JEL C92, H21, D72
Depositing User: ePub Administrator
Date Deposited: 04 Dec 2013 12:58
Last Modified: 25 Nov 2014 23:28
URI: http://epub.wu.ac.at/id/eprint/4048

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