Funding Public Goods in a Globalized World: Who Will Carry the Tax Burden?*

• In Event: Politics of Pre-Distribution and Redistribution

Abstract

Research on tax preferences tends to focus on variations across the rich or general public. Yet, the poor are not necessarily a homogenous block with uniform tax preferences. Following the Ricardo-Viner model, in liberalizing developing economies, for example, the poor are divided into trade winners and losers. We therefore assess if and how this premise of trade openness changes expectations on tax burden preferences to fund public goods across various income and trade-winning status groups. We analyze data from an original, randomized household survey of 1,008 individuals in Sao Paulo State, Brazil, in 2019, to assess preferences for increases in income, value added, or corporate taxes to improve funding for the universal healthcare system after Brazil adopts its free trade deal with the European Union. Statistical estimations reveal that, when expecting advancements from a trade deal with the European Union, the average respondent broadly favors shifting the tax burden onto corporations. Yet, the trade losing poor do have divergent preferences than the trade winning poor on taxing such corporations. A critical implication is that globalization may create a barrier against progressive fiscal strategies in emerging economies.

Authors

• Ida Bastiaens, Fordham University

• Sarah Andrea Berens, University of Innsbruck