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A taste for taxes: Minimizing distortions using political preferences

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  • Huet-Vaughn, Emiliano
  • Robbett, Andrea
  • Spitzer, Matthew

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 0.77, the elasticity point estimate is close to zero when taxes go to a favored agency. There is also an increase in total output for the matched population among moderates. There is no evidence that these effects hold for self-identified liberals or conservatives.

Suggested Citation

  • Huet-Vaughn, Emiliano & Robbett, Andrea & Spitzer, Matthew, 2019. "A taste for taxes: Minimizing distortions using political preferences," Journal of Public Economics, Elsevier, vol. 180(C).
    • Handle: RePEc:eee:pubeco:v:180:y:2019:i:c:s0047272719301161
    DOI: 10.1016/j.jpubeco.2019.104055
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    2. Brad Nathan & Ricardo Perez-Truglia & Alejandro Zentner, 2025. "My Taxes Are Too Darn High: Why Do Households Protest Their Taxes?," American Economic Journal: Economic Policy, American Economic Association, vol. 17(1), pages 273-310, February.
    3. Lu, Kelin, 2022. "Overreaction to capital taxation in saving decisions," Journal of Economic Dynamics and Control, Elsevier, vol. 144(C).

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    Keywords

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    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General

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