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

Sausgruber, Rupert and Tyran, Jean-Robert (2014) Discriminatory Taxes are Unpopular. Even when they are Efficient and Distributionally Fair. Journal of Economic Behavior & Organization, 108. pp. 463-476. ISSN 0090-5720

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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:	Article
Additional Information:	To see the final version of this paper please visit the publisher's website. Users without a subscription are not able to see the full content. The original publication is available at www.elsevier.com.
Keywords:	taxation / behavioral public economics / voting / efficiency / fairness
Classification Codes:	JEL C92, H21, D72
Divisions:	Departments > Volkswirtschaft > Finanzwissenschaft u öffentl. Wirtschaft
Version of the Document:	Accepted for Publication
Depositing User:	ePub Administrator
Date Deposited:	06 May 2014 12:01
Last Modified:	23 Aug 2017 21:27
Related URLs:	Publisher
FIDES Link:	https://bach.wu.ac.at/d/research/results/69630/
URI:	https://bach-s59.wu.ac.at/id/eprint/4136

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