The Fairness of Progressive Income Taxation

• In Event: Behavioral Tax: Fairness and Trust

Abstract

We report results for three experiments in which we examine taxpayers’ fairness judgments for (a) progressive versus proportional (flat) tax rates and (b) fair tax amounts in dollars in response to—respectively—abstract and concrete framing of questions. Consistent with numerous telephone public opinion polls, we find support for the proposition that a majority of U.S. citizens believe progressive income tax rates are more fair than proportional tax rates when the question is posed abstractly, i.e., without any concrete contextual references to persons or dollars of income or taxes paid. However, we find preference reversals of two to one in favor of proportional taxation (flat income tax rates) when participants are asked to make actual assignments of tax dollars between two taxpayers. We also find that understanding of progressive tax rates is low; only 34 percent of participants correctly identify four pairwise tax and income scenarios as representative of progressive, proportional, or regressive tax rates. We further examine participants’ tax fairness judgments in the context of broader political attitudes about trust in government, the role of government in society, the need for transparency in government, satisfaction with government, conservative/liberal identity, etc.; finding that political attitudes predict participants’ attitudes about progressive tax rates in the abstract, but that concrete assignments of fair taxes are much more bipartisan.

Authors

• Michael L Roberts, University of Colorado at Denver

• Theresa Roberts, University of Colorado at Denver