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Preferences for funding particular government services from different taxes

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  • Kemp, Simon

Abstract

Five studies investigated New Zealanders' preferences for funding particular government-provided services from different types of tax: flat and progressive income tax and flat consumption tax. Respondents preferred progressive to flat income tax when the service was relatively cheap, and when it was perceived that rich people benefited more from the service. They preferred to fund more expensive services and those perceived as more valuable or vital from income rather than consumption tax, regardless of whether the income tax was flat or progressive. The relative funding preferences for income and consumption tax were correlated with the perceived relative predictability of revenue from the two taxes and the perceived likelihood that the government might change them, but not to respondents' ideas of how much revenue is obtained from them.

Suggested Citation

  • Kemp, Simon, 2008. "Preferences for funding particular government services from different taxes," Journal of Economic Psychology, Elsevier, vol. 29(1), pages 54-72, February.
    • Handle: RePEc:eee:joepsy:v:29:y:2008:i:1:p:54-72
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    References listed on IDEAS

    as
    1. Simon Kemp, 2002. "Public Goods and Private Wants," Books, Edward Elgar Publishing, number 2699.
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    6. Richard H. Thaler, 2008. "Mental Accounting and Consumer Choice," Marketing Science, INFORMS, vol. 27(1), pages 15-25, 01-02.
    7. Mahoney, Michelle S. & Kemp, Simon & Webley, Paul, 2005. "Factors in lay preferences for government or private supply of services," Journal of Economic Psychology, Elsevier, vol. 26(1), pages 73-87, February.
    8. Krusell, Per & Quadrini, Vincenzo & Rios-Rull, Jose-Victor, 1996. "Are consumption taxes really better than income taxes?," Journal of Monetary Economics, Elsevier, vol. 37(3), pages 475-503, June.
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