12 May 2006

Bad Information Causes Bad Policy

A key factor in support for a flat tax or retail sales tax, instead of the income tax, and for estate tax repeal, is the misconception that the rich pay less in taxes under the current system than they actually do.

In this paper, I use data from an exceptionally detailed survey of attitudes toward taxation in the United States to investigate the relative importance of one particular misconception—that high–income people would pay more tax under an apparently regressive reform, mostly because many people believe that the distribution of the burden of the existing income tax is regressive—in explaining public support for a flat tax and a retail sales tax. I find that this policy misconception is strongly associated with support for replacing the existing income tax with either of these two alternatives. A similar misconception about the distributional impact of the estate tax explains some of the support for eliminating that tax.

Ahh democracy. I've always been a fan of movement politics, by which I mean the long term agenda of changing what people believe, as opposed to simply trying to win over swing voters and manipulate turnout in close elections, which I think of as tactical politics. Studies like the one above show the fruits of that approach.

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