A taste for taxes: Minimizing distortions using political preferences

Emiliano Huet-Vaughn, Andrea Robbett and Matthew Spitzer

Journal of Public Economics, 2019, vol. 180, issue C

Abstract: We conduct an experiment with online workers to assess whether the distortionary effect of a tax is sensitive to the ideological match between taxpayer and tax expenditures. We find that, among self-identified political moderates, the labor supply elasticity with respect to the net of tax wage is significantly smaller when individuals pay taxes to a favored government agency as compared to an unfavored one. While the tax has a significant distortionary effect in the latter case, with a point estimate for the labor supply elasticity of approximately 0.77, the elasticity point estimate is close to zero when taxes go to a favored agency. There is also an increase in total output for the matched population among moderates. There is no evidence that these effects hold for self-identified liberals or conservatives.

Keywords: Taxes; Labor supply; Efficiency cost of taxation; Experiment; Political preferences; Ideology; Distortion; Expenditures (search for similar items in EconPapers)
JEL-codes: C9 D03 H21 H50 J22 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:180:y:2019:i:c:s0047272719301161

DOI: 10.1016/j.jpubeco.2019.104055

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