Let Them Eat Cake? Inequality and Public Attitudes Towards Progressive Taxation

Recent research on individual tax preferences indicates that while higher tax levels are politically unpopular, greater tax progressivity is not. This is good news for governments seeking politically feasible means of redistribution. However, with research into individual tax preferences in its infancy, there are still many unanswered questions regarding public support for more progressive taxation. In particular, we currently know very little about how individual attitudes towards tax progressivity respond to changes in the distribution of wealth and income. In this paper, we examine the effect of inequality on public attitudes towards progressive taxation. Our paper consists of two parts. First, we conduct a cross-sectional analysis of advanced post-industrial democracies using the ISSP’s (2006) Role of Government survey and country-level indicators of inequality. We find that support for progressive taxation rises with higher levels of income inequality. Yet, surprisingly in light of conventional theories of redistribution preferences, we find that it is the rich rather than the poor who are more likely to support increased tax progressivity when inequality is higher. In the second part of our analysis, we use panel data from the General Social Survey (GSS) from 2006 to 2012 to substantiate this finding and to explore alternative explanations for it. In doing so, we contribute to recent work on redistribution preferences and inequality that has tried to make sense of the phenomenon of ‘altruism’ amongst high-income earners.