A Taste for Taxes: Minimizing Distortions Using Political Preferences

21 Pages Posted: 3 Apr 2017

See all articles by Emiliano Huet-Vaughn

Emiliano Huet-Vaughn

UCLA

Andrea Robbett

Middlebury College - Department of Economics

Matthew Spitzer

Middlebury College - Department of Economics

Date Written: March 31, 2017

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 0.75, the elasticity point estimate is virtually zero when taxes go to a favored agency. There is also an increase in total output for the matched population. There is no evidence of a similar effect for those on the ends of the ideological spectrum.

Keywords: taxes, labor supply, efficiency cost of taxation, experiment, political preferences, ideology, distortions, expenditures

JEL Classification: H21, J22, C9, D03, H50

Suggested Citation

Huet-Vaughn, Emiliano and Robbett, Andrea and Spitzer, Matthew, A Taste for Taxes: Minimizing Distortions Using Political Preferences (March 31, 2017). Available at SSRN: https://ssrn.com/abstract=2944347 or http://dx.doi.org/10.2139/ssrn.2944347

Emiliano Huet-Vaughn (Contact Author)

UCLA ( email )

4284 School of Public Affairs
Los Angeles, CA 90095
United States

Andrea Robbett

Middlebury College - Department of Economics ( email )

Warner Hall
Middlebury, VT 05753
United States

Matthew Spitzer

Middlebury College - Department of Economics ( email )

Munroe Hall
Middlebury, VT 05753
United States

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