Discriminatory taxes are unpopular—Even when they are efficient and distributionally fair

Rupert Sausgruber; Jean-Robert Karl Tyran

doi:10.1016/j.jebo.2013.12.022

Discriminatory taxes are unpopular—Even when they are efficient and distributionally fair

Rupert Sausgruber, Jean-Robert Karl Tyran

3 Citationer (Scopus)

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 the 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 is unpopular, as predicted. Surprisingly, however, DT remains 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.

Originalsprog	Engelsk
Tidsskrift	Journal of Economic Behavior & Organization
Vol/bind	108
Sider (fra-til)	463–476
ISSN	0167-2681
DOI	https://doi.org/10.1016/j.jebo.2013.12.022
Status	Udgivet - 1 dec. 2014

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10.1016/j.jebo.2013.12.022

Citationsformater

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title = "Discriminatory taxes are unpopular—Even when they are efficient and distributionally fair",

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 the 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 is unpopular, as predicted. Surprisingly, however, DT remains 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.",

author = "Rupert Sausgruber and Tyran, {Jean-Robert Karl}",

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AU - Sausgruber, Rupert

AU - Tyran, Jean-Robert Karl

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PY - 2014/12/1

Y1 - 2014/12/1

N2 - We explore the political acceptance of taxation in commodity markets. Participants in our experiment earn incomes by trading and must collectively choose one of the 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 is unpopular, as predicted. Surprisingly, however, DT remains 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.

AB - We explore the political acceptance of taxation in commodity markets. Participants in our experiment earn incomes by trading and must collectively choose one of the 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 is unpopular, as predicted. Surprisingly, however, DT remains 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.

U2 - 10.1016/j.jebo.2013.12.022

DO - 10.1016/j.jebo.2013.12.022

M3 - Journal article

SN - 0167-2681

VL - 108

SP - 463

EP - 476

JO - Journal of Economic Behavior & Organization

JF - Journal of Economic Behavior & Organization

ER -

Discriminatory taxes are unpopular—Even when they are efficient and distributionally fair

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