Preferences Over Taxation of High-Income Individuals: Evidence from a Survey Experiment

52 Pages Posted: 9 Oct 2020

See all articles by Dirk Engelmann

Dirk Engelmann

Humboldt University of Berlin - School of Business and Economics; Economics Institute of the Academy of Sciences of the Czech Republic; University of Copenhagen; CESifo (Center for Economic Studies and Ifo Institute)

Eckhard Janeba

University of Mannheim - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Lydia Mechtenberg

University of Hamburg

Nils Wehrhöfer

affiliation not provided to SSRN

Date Written: 2020

Abstract

Mobility of high-income individuals across borders puts pressure on governments to lower taxes. A central tenet of the corresponding textbook argument is that mobile individuals react to tax differentials through migration, and in turn immobile individuals vote for lower taxes. We investigate to which extent this argument is complete. In particular, political ideology may influence voting on taxes. We vary mobility and foreign taxes in a survey experiment within the German Internet Panel (GIP), with more than 3,000 individuals participating. We find that while the treatment effects qualitatively confirm model predictions how voters take mobility of high-income earners into account when choosing domestic taxes, ideology matters: left-leaning high-income individuals choose higher taxes and emigrate less frequently than right-leaning ones. These findings are in line with the comparative-static predictions of a simple model of inequality aversion when the aversion parameters vary with ideology.

Keywords: taxation, mobility, ideology, survey experiments

JEL Classification: D720, F220, H210

Suggested Citation

Engelmann, Dirk and Janeba, Eckhard and Mechtenberg, Lydia and Wehrhöfer, Nils, Preferences Over Taxation of High-Income Individuals: Evidence from a Survey Experiment (2020). CESifo Working Paper No. 8595, Available at SSRN: https://ssrn.com/abstract=3707935

Dirk Engelmann

Humboldt University of Berlin - School of Business and Economics ( email )

Spandauer Str. 1
Berlin, D-10099
Germany

Economics Institute of the Academy of Sciences of the Czech Republic ( email )

Prague
Czech Republic

University of Copenhagen ( email )

Nørregade 10
Copenhagen, København DK-1165
Denmark

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Eckhard Janeba (Contact Author)

University of Mannheim - Department of Economics ( email )

L7, 3-5
D-68131 Mannheim
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Lydia Mechtenberg

University of Hamburg ( email )

Allende-Platz 1
Hamburg, 20146
Germany

Nils Wehrhöfer

affiliation not provided to SSRN

No Address Available

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