Nothing Special   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/eee/jeborg/v108y2014icp463-476.html
   My bibliography  Save this article

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

Author

Listed:
  • Sausgruber, Rupert
  • Tyran, Jean-Robert
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.

Suggested Citation

  • Sausgruber, Rupert & Tyran, Jean-Robert, 2014. "Discriminatory taxes are unpopular—Even when they are efficient and distributionally fair," Journal of Economic Behavior & Organization, Elsevier, vol. 108(C), pages 463-476.
    • Handle: RePEc:eee:jeborg:v:108:y:2014:i:c:p:463-476
    DOI: 10.1016/j.jebo.2013.12.022
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167268114000055
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jebo.2013.12.022?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Feddersen, Timothy & Gailmard, Sean & Sandroni, Alvaro, 2009. "Moral Bias in Large Elections: Theory and Experimental Evidence," American Political Science Review, Cambridge University Press, vol. 103(2), pages 175-192, May.
    2. Chlaß, Nadine & Güth, Werner & Miettinen, Topi, 2019. "Purely procedural preferences - Beyond procedural equity and reciprocity," European Journal of Political Economy, Elsevier, vol. 59(C), pages 108-128.
    3. Michal Krawczyk, 2011. "A model of procedural and distributive fairness," Theory and Decision, Springer, vol. 70(1), pages 111-128, January.
    4. Großer, Jens & Reuben, Ernesto, 2013. "Redistribution and market efficiency: An experimental study," Journal of Public Economics, Elsevier, vol. 101(C), pages 39-52.
    5. Thomas Markussen & Louis Putterman & Jean-Robert Tyran, 2011. "Self-Organization for Collective Action: An Experimental Study of Voting on Formal, Informal, and No Sanction Regimes," Working Papers 2011-4, Brown University, Department of Economics.
    6. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 817-868.
    7. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
    8. Gary E Bolton & Jordi Brandts & Axel Ockenfels, 2005. "Fair Procedures: Evidence from Games Involving Lotteries," Economic Journal, Royal Economic Society, vol. 115(506), pages 1054-1076, October.
    9. Babcock, Linda, et al, 1995. "Biased Judgments of Fairness in Bargaining," American Economic Review, American Economic Association, vol. 85(5), pages 1337-1343, December.
    10. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
    11. Dirk Engelmann & Martin Strobel, 2004. "Inequality Aversion, Efficiency, and Maximin Preferences in Simple Distribution Experiments," American Economic Review, American Economic Association, vol. 94(4), pages 857-869, September.
    12. Tyran, Jean-Robert & Sausgruber, Rupert, 2006. "A little fairness may induce a lot of redistribution in democracy," European Economic Review, Elsevier, vol. 50(2), pages 469-485, February.
    13. Ernst Fehr & Armin Falk, 1999. "Wage Rigidity in a Competitive Incomplete Contract Market," Journal of Political Economy, University of Chicago Press, vol. 107(1), pages 106-134, February.
    14. Sausgruber, Rupert & Tyran, Jean-Robert, 2011. "Are we taxing ourselves?," Journal of Public Economics, Elsevier, vol. 95(1), pages 164-176.
    15. Smith, Vernon L, et al, 1982. "Competitive Market Institutions: Double Auctions vs. Sealed Bid-Offer Auctions," American Economic Review, American Economic Association, vol. 72(1), pages 58-77, March.
    16. Gary Charness & Matthew Rabin, 2002. "Understanding Social Preferences with Simple Tests," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(3), pages 817-869.
    17. Ernst Fehr & Michael Naef & Klaus M. Schmidt, 2006. "Inequality Aversion, Efficiency, and Maximin Preferences in Simple Distribution Experiments: Comment," American Economic Review, American Economic Association, vol. 96(5), pages 1912-1917, December.
    18. Werner Güth & Vittoria Levati & Rupert Sausgruber, 2005. "Tax morale and (de-)centralization: An experimental study," Public Choice, Springer, vol. 125(1), pages 171-188, July.
    19. N. Gregory Mankiw & Matthew Weinzierl, 2010. "The Optimal Taxation of Height: A Case Study of Utilitarian Income Redistribution," American Economic Journal: Economic Policy, American Economic Association, vol. 2(1), pages 155-176, February.
    20. Tyran, Jean-Robert, 2004. "Voting when money and morals conflict: an experimental test of expressive voting," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1645-1664, July.
    21. Höchtl, Wolfgang & Sausgruber, Rupert & Tyran, Jean-Robert, 2012. "Inequality aversion and voting on redistribution," European Economic Review, Elsevier, vol. 56(7), pages 1406-1421.
    22. Sausgruber, Rupert & Tyran, Jean-Robert, 2011. "Are we taxing ourselves?: How deliberation and experience shape voting on taxes," Journal of Public Economics, Elsevier, vol. 95(1-2), pages 164-176, February.
    23. John A. List, 2011. "The Market for Charitable Giving," Journal of Economic Perspectives, American Economic Association, vol. 25(2), pages 157-180, Spring.
    24. Blanco, Mariana & Engelmann, Dirk & Normann, Hans Theo, 2011. "A within-subject analysis of other-regarding preferences," Games and Economic Behavior, Elsevier, vol. 72(2), pages 321-338, June.
    25. Rudolf Kerschbamer & Matthias Sutter & Uwe Dulleck, 2017. "How Social Preferences Shape Incentives in (Experimental) Markets for Credence Goods," Economic Journal, Royal Economic Society, vol. 127(600), pages 393-416, March.
    26. Werner Güth & M. Vittoria Levati & Matteo Ploner, 2013. "Does Procedural Fairness Crowd Out Other-Regarding Concerns? A Bidding Experiment," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 169(3), pages 433-450, September.
    27. Buckley, Edward & Croson, Rachel, 2006. "Income and wealth heterogeneity in the voluntary provision of linear public goods," Journal of Public Economics, Elsevier, vol. 90(4-5), pages 935-955, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Staněk, Rostislav & Krčál, Ondřej & Čellárová, Katarína, 2022. "Pull yourself up by your bootstraps: Identifying procedural preferences against helping others in the presence of moral hazard," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 98(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kerschbamer, Rudolf & Müller, Daniel, 2020. "Social preferences and political attitudes: An online experiment on a large heterogeneous sample," Journal of Public Economics, Elsevier, vol. 182(C).
    2. Hedegaard, Morten & Kerschbamer, Rudolf & Müller, Daniel & Tyran, Jean-Robert, 2021. "Distributional preferences explain individual behavior across games and time," Games and Economic Behavior, Elsevier, vol. 128(C), pages 231-255.
    3. Paetzel, Fabian & Sausgruber, Rupert & Traub, Stefan, 2014. "Social preferences and voting on reform: An experimental study," European Economic Review, Elsevier, vol. 70(C), pages 36-55.
    4. Balafoutas, Loukas & Kocher, Martin G. & Putterman, Louis & Sutter, Matthias, 2013. "Equality, equity and incentives: An experiment," European Economic Review, Elsevier, vol. 60(C), pages 32-51.
    5. Höchtl, Wolfgang & Sausgruber, Rupert & Tyran, Jean-Robert, 2012. "Inequality aversion and voting on redistribution," European Economic Review, Elsevier, vol. 56(7), pages 1406-1421.
    6. Lacomba, Juan A. & Lagos, Francisco & Reuben, Ernesto & van Winden, Frans, 2017. "Decisiveness, peace, and inequality in games of conflict," Journal of Economic Psychology, Elsevier, vol. 63(C), pages 216-229.
    7. Antonio Filippin & Manuela Raimondi, 2016. "The Patron Game with Heterogeneous Endowments: A Case Against Inequality Aversion," De Economist, Springer, vol. 164(1), pages 69-81, March.
    8. Engelmann, Dirk & Janeba, Eckhard & Mechtenberg, Lydia & Wehrhöfer, Nils, 2023. "Preferences over taxation of high-income individuals: Evidence from a survey experiment," European Economic Review, Elsevier, vol. 157(C).
    9. Luciano Andreozzi & Matteo Ploner & Ivan Soraperra, 2013. "Justice among strangers. On altruism, inequality aversion and fairness," CEEL Working Papers 1304, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
    10. Gueye, Mamadou & Quérou, Nicolas & Soubeyran, Raphael, 2020. "Social preferences and coordination: An experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 173(C), pages 26-54.
    11. Alexia Gaudeul, 2013. "Social preferences under uncertainty," Jena Economics Research Papers 2013-024, Friedrich-Schiller-University Jena.
    12. Yang, Yang & Onderstal, Sander & Schram, Arthur, 2016. "Inequity aversion revisited," Journal of Economic Psychology, Elsevier, vol. 54(C), pages 1-16.
    13. Karagozoglu, Emin & Riedl, Arno, 2010. "Information, Uncertainty, and Subjective Entitlements in Bargaining," IZA Discussion Papers 5079, Institute of Labor Economics (IZA).
    14. Krawczyk, Michal & Le Lec, Fabrice, 2015. "Can we neutralize social preference in experimental games?," Journal of Economic Behavior & Organization, Elsevier, vol. 117(C), pages 340-355.
    15. Großer, Jens & Reuben, Ernesto, 2013. "Redistribution and market efficiency: An experimental study," Journal of Public Economics, Elsevier, vol. 101(C), pages 39-52.
    16. Felix Koelle, 2012. "Heterogeneity and Cooperation in Privileged Groups: The Role of Capability and Valuation on Public Goods Provision," Cologne Graduate School Working Paper Series 03-08, Cologne Graduate School in Management, Economics and Social Sciences.
    17. Gago, Andrés, 2021. "Reciprocity and uncertainty: When do people forgive?," Journal of Economic Psychology, Elsevier, vol. 84(C).
    18. James Bland & Nikos Nikiforakis, 2013. "Tacit Coordination in Games with Third-Party Externalities," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2013_19, Max Planck Institute for Research on Collective Goods.
    19. David Macro & Jeroen Weesie, 2016. "Inequalities between Others Do Matter: Evidence from Multiplayer Dictator Games," Games, MDPI, vol. 7(2), pages 1-23, April.
    20. Ubeda, Paloma, 2014. "The consistency of fairness rules: An experimental study," Journal of Economic Psychology, Elsevier, vol. 41(C), pages 88-100.

    More about this item

    Keywords

    Taxation; Behavioral public economics; Voting; efficiency; Fairness;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jeborg:v:108:y:2014:i:c:p:463-476. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jebo .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.