Perceptions of Taxing and Spending: A Survey Experiment

42 Pages Posted: 25 Oct 2014 Last revised: 18 Jan 2015

See all articles by Conor Clarke

Conor Clarke

Yale University, Law School

Edward G. Fox

University of Michigan Law School

Date Written: October 21, 2014

Abstract

This paper presents the results of an original survey experiment on whether the public prefers “tax expenditures” to “direct outlays” — that is, whether members of the public are more likely to support government spending that takes the form of a tax credit rather than a check or cash. Using a survey that spans a wide variety of policy areas — and with important variations in wording and information — we show that the public strongly prefers tax expenditures even when the “economic substance” of the proposed policies is identical. We also show that the public views tax expenditures as less costly than equivalent direct outlays. These results support a longstanding but largely unstudied hypothesis that tax expenditures “hide” the costs of government spending, and have implications for why tax expenditures have continued to grow in size and complexity.

Keywords: Tax, Tax Law, Tax Policy, Framing Effects, Behavioral Economics, Law and Economics

JEL Classification: K00, K340, H200, H600, H500

Suggested Citation

Clarke, Conor and Fox, Edward G., Perceptions of Taxing and Spending: A Survey Experiment (October 21, 2014). 124 Yale Law Journal 1252 (2015). Available at SSRN: https://ssrn.com/abstract=2513387

Conor Clarke (Contact Author)

Yale University, Law School ( email )

127 Wall Street
New Haven, CT 06511
United States

Edward G. Fox

University of Michigan Law School ( email )

625 South State Street
Ann Arbor, MI 48109-1215
United States

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