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Level or Concentration? A Cross-national Analysis of Public Attitudes Towards Taxation Policies

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Abstract

This article examines the role of income status and policy context in jointly determining public responses to taxation policies. Based upon the notion that taxpayers’ self-interested preferences are inextricably intertwined with the policy context, I hypothesise that high-income taxpayers react differently to taxation policies depending on their perceived tax burden associated with tax policy structures. Using international social survey data, I find that the link between income and tax support is conditioned by the tax system within which taxpayers are contextually situated. In countries with comparatively high levels of direct taxes, high-income taxpayers react more negatively to higher and more progressive taxation than do low-income counterparts. In contrast, in low-tax societies, attitudinal cleavages among income classes become less intense. Moreover, the results reveal that the impact of income on tax attitudes does not significantly vary across countries with different degrees of tax concentration. The article concludes with a discussion of the implications of these findings and directions for further research.

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Notes

  1. 1.

    Of course, this is not to say that tax resistance will be absent in low-tax societies nor that tax level is the only cause of a protest movement. For instance, Martin (2008) argues that in the United States not every tax increase (i.e., the absolute amount of taxes) causes a tax revolt but that American taxpayers react angrily when they understand that a policy change undermines their informal tax privileges—i.e., specific tax exemptions not codified in law but are part of the tax system in practice—that provide them with a shelter from potential market anomalies.

  2. 2.

    This is not to say that there is no relationship between indirect tax policies and mass opinion.

  3. 3.

    Their work differs from the present study in that they assessed ‘social class’ using the International Socio-Economic Index (ISEI) and did not associate income status with tax preferences (as argued earlier, it is income position that directly determines one’s actual and perceived tax burden and thus contributes to the formation of tax policy opinion), and in that they employed different measures of ‘tax policy schemes’ and ‘tax attitudes’.

  4. 4.

    The included countries are Australia, Canada, Czech Republic, Denmark, Finland, France, Germany, Great Britain, Ireland, Japan, the Netherlands, New Zealand, Norway, Poland, Slovak Republic (available from a separate data file), South Korea, Sweden, Switzerland, and the United States.

  5. 5.

    Respondents aged 17 or younger were omitted.

  6. 6.

    One disadvantage of using this question is that the word ‘taxes’ covers a wide variety of taxes including indirect taxes (i.e., taxes on goods and services). Ideally, ‘taxes’ should only refer to direct income taxes because the present study argues that tax attitudes are jointly motivated by income status and direct income taxes.

  7. 7.

    ‘Much too high’ and ‘too high’ were coded as −1, while ‘much too low’ and ‘too low’ were coded as +1.

  8. 8.

    For several countries, household income is offered on an annual, not a monthly, basis. To gain comparability across countries, annual incomes were divided by 12.

  9. 9.

    Household size ranges from 1 to 34 (mean = 2.7; SD 1.4). To reduce the influence of outlying values, respondents with 9 or more household members (0.2 %) were recoded as 8.

  10. 10.

    Respondents with zero income (0.3 %), that is, Ln(0), were dropped from the data.

  11. 11.

    Subjective (explanatory) variables such as political trust, political ideology, and self-rated social class were omitted from the analysis to avoid potential endogeneity issues.

  12. 12.

    For related arguments, see Roberts and Hite (1994), Roberts et al. (1994), but see Edlund (2003).

  13. 13.

    The four country-level variables were standardised prior to analysis for ease of interpretation.

  14. 14.

    In this regard, Edlund (2003) notes that “[t]he comparatively low degree of complexity and high degree of standardization, i.e. the high degree of system transparency, is likely to advance public understanding of social and tax policy” (p. 151, italics in original). Moreover, it could be argued that the better educated are more likely to accurately assess the impact of particular tax structures on their households.

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Acknowledgments

I am grateful to Professors Stephen D Fisher and Tamas David-Barrett for stimulating discussions and encouragements throughout the research period. I also wish to thank three anonymous referees for their thought-provoking comments on an earlier version of this article.

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Correspondence to Takanori Sumino.

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Sumino, T. Level or Concentration? A Cross-national Analysis of Public Attitudes Towards Taxation Policies. Soc Indic Res 129, 1115–1134 (2016). https://doi.org/10.1007/s11205-015-1169-1

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Keywords

  • Class politics
  • Policy feedback
  • Income status
  • Tax policy
  • Public opinion