Revealed Preference for Redistribution and the Role of Government

Matthias Rodemeier and Gregory Sun

No 12645, CESifo Working Paper Series from CESifo

Abstract: We study how Americans trade off the welfare of the poor versus the rich using incentivized transfer experiments. Combining this with estimates of the Elasticity of Taxable Income, we quantify optimal income tax rates in the US. Revealed preferences show strong concern for the poor across the political spectrum, implying tax rates far more progressive than existing political agendas. This creates a puzzle: individuals vote for policies that are less progressive than their distributive preferences imply. We trace this puzzle to aversion toward government-mediated redistribution. Liberals’ support for very progressive tax rates is dampened by misuse of public funds, while conservatives object to taxation on principled grounds tied to coercion and property rights. Our paper illustrates that disagreement over redistribution mostly reflects disagreement over institutions rather than over helping the poor.

Keywords: income taxation; redistributive preferences; social welfare weights; government aversion; political economy (search for similar items in EconPapers)
JEL-codes: D63 D72 D90 H21 H30 P35 (search for similar items in EconPapers)
Date: 2026
New Economics Papers: this item is included in nep-pbe and nep-pol
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