Beliefs about political equality prevent consensus for progressive taxes

The United States and other wealthy democracies over the past century have rarely responded to rising economic inequality by adopting more progressive fiscal policies, according to a new study co-authored by the Yale political scientist Kenneth Scheve.

The study, published in the journal Comparative political studies, provides evidence that a widespread belief among voters that the government should treat all citizens equally, regardless of economic advantage or disadvantage, helps explain why countries often fail to raise unemployment rates. taxation of the rich in response to rising inequality. The results are based on surveys conducted in the United States, United Kingdom and Germany.

“Progressive taxation is a powerful policy tool to address rising inequality, but we’ve found that wealthy democracies don’t use it very often,” said Scheve, Dean Acheson Professor of Political Science and Global Affairs at the Yale Faculty of Arts and Sciences. “We identify the belief in equal treatment standards – the idea that governments should treat people equally – as a key driver of reluctance to adopt progressive tax policies. Many people perceive taxing the wealthy at higher rates than others as a violation of this standard.”

For the study, Scheve and co-author David Stasavage of New York University first analyzed data on the historical relationship between economic inequality and taxes levied on the wealthy over the past century in 17 countries, including the United States, Canada, Japan, Australia and New Zealand. , and a dozen European democracies. They found that with few exceptions, rising inequality did not lead to a shift towards more progressive tax policies.

There are several potential reasons why governments are reluctant to levy higher taxes on the wealthy, Scheve said. A prominent narrative in the United States is that wealthy special interests wield outsized influence over politics, which prevents lawmakers from enacting progressive tax policies.

“Certainly, there is something to this idea, but we also see a reluctance to adopt progressive tax policies in wealthy democracies where money does not play a political role as important as in the United States, so this does not probably isn’t the whole story,” said Scheve, a faculty member at Yale’s Jackson School of Global Affairs.

People have a range of opinions about political equality and what constitutes a fair tax system, Scheve noted. Many argue that achieving equality of outcomes should guide policy. Others believe that a fair tax system considers whether people have achieved their wealth because they have worked harder than others. The study focuses on the arguments for fairness standards of equal treatment: the notion that, just as all citizens should have the same vote in a democracy or the same equal protection under the law, they should also pay the same tax rate.

In addition to analyzing historical trends, researchers conducted surveys in Germany and the UK to measure people’s commitment to believing that the government should treat citizens equally and how this belief relates to their tax policy preferences. The surveys – which involved representative samples of 2,100 people in Germany and 1,913 in the UK – both found that stronger beliefs in equal treatment predicted a preference for less progressive tax policies. They also showed that people who strongly support the equal treatment norm also frequently expressed concerns about inequality in their country, but they do not believe that progressive taxation is an appropriate tool to address it.

In a separate survey experiment conducted in the United States, on a representative sample of 1,000 people, the researchers repeated the same questions, but added a variation: they randomly assigned a part of the respondents to a group of treatment in which they were presented with a reform proposal that would weight people’s votes according to their level of education – a clear violation of the principle of democratic equality of one person, one vote.

The aim of this experiment was to show whether support for equal treatment norms leads to preferences for a less progressive tax policy; it’s possible, the researchers say, that people embrace beliefs of equal treatment to justify their opposition to higher taxes on the wealthy, while the reasons might have more to do with self-interest or concerns about wealth. economic efficiency. As in the UK and Germany, the US survey found that opinions about equal treatment standards predict people’s preferences for less progressive tax policies, even if they are troubled by rising inequality. Respondents exposed to the weighted voting proposition became more committed to equal treatment beliefs and more likely to oppose progressive taxation, demonstrating a causal relationship between support for equal treatment norms and opposition to progressive taxation.

“Clearly, many voters hold a view of political equality based on equal treatment standards that opposes progressive fiscal policies,” Scheve said. “It could be that enough voters feel that this prevents the formation of a consensus to tackle inequality by raising taxes on higher incomes and wealth.”