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Preferences for redistribution, the size of government and the tax system

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  • Fatica, Serena
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    Abstract

    Using survey data from a cross-section of European countries, this paper analyzes the determinants of individual support for a large government motivated by redistributive policies and for progressive tax schedules. Preferences for political redistribution, as well as fairness beliefs, aversion to equality and perceptions on the actual functioning, the sustainability and the effects - among which immigration - of the welfare system are found to significantly determine the demand for more generous benefits and higher taxes. Moreover, preferences for redistribution play an important role in shaping the attitudes toward progressive income taxation, in addition to self-interest calculus. Overall, these findings are revealing on the political feasibility of tax reforms, as well as of alternative measures to achieve fiscal consolidation - a relevant policy issue after the strains put by the recent financial and economic crisis on national budgets.

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    Bibliographic Info

    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 29782.

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    Date of creation: Feb 2011
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    Handle: RePEc:pra:mprapa:29782

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    Keywords: political redistribution; size of goverment; tax progressivity;

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