SOCIAL PREFERENCES AND TAX POLICY DESIGN: SOME EXPERIMENTAL EVIDENCE

Lucy Ackert, Jorge Martinez‐vazquez and Mark Rider
Authors registered in the RePEc Author Service: Jorge Martinez-Vazquez ()

Economic Inquiry, 2007, vol. 45, issue 3, 487-501

Abstract: This article reports the results of a set of experiments designed to examine whether a taste for fairness affects people’s preferred tax structure. Using the Fehr and Schmidt model, we devise a simple test for the presence of social preferences in voting for alternative tax structures. The experimental results show that individuals demonstrate concern for their own payoff and inequality aversion in choosing between alternative tax structures. However, concern for redistribution decreases as the deadweight loss from progressive taxation increases. Our findings have important implications for tax policy design. (JEL C92, D63, H21, H23)

Date: 2007
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