No. 257: Fair Rate or Fair Share? A Survey Experiment on Framing and Preferences for Taxing Top Incomes

Calls to tax top incomes more heavily leave open whether „more“ means a higher average tax rate (ATR) or a larger share of total income-tax revenue (TAXSHARE), and which top group is meant. In a preregistered survey experiment in Germany (N = 3,129), each respondent evaluates either the top 10% or the top 1% of income earners, described by its percentile label alone, by its income threshold and income share alone, or by both. Each respondent states a fair ATR and a fair TAXSHARE separately. Given the top group’s actual income and holding total income-tax revenue at its current level, ATR and TAXSHARE are two expressions of the same policy. Respondents then see each judgment translated into the other and must state one consistent pair. Before the translation, respondents state similar fair ATRs and fair TAXSHAREs for both top groups, although a given ATR implies a TAXSHARE about three times larger for the top 10%. On average, the fair ATR therefore lies 17.8 percentage points above the ATR implied by the fair TAXSHARE for the top 10% and 16.7 percentage points below it for the top 1%. Once constrained, respondents revise the fair ATR toward the ATR implied by the pre-translation fair TAXSHARE, widening the difference in fair ATRs between the top groups from 1.9 to 18.0 percentage points. Top 1% respondents keep more of the fair ATR they initially stated than top 10% respondents do. How the top group is described matters as well: holding the income figures fixed, the label raises the fair ATR by 4.3 percentage points for the top 10% and 6.5 percentage points for the top 1% and shifts whom respondents picture from professionals and managers toward generic references to „the rich“. Stated preferences for taxing top incomes thus depend on whether an ATR or a TAXSHARE is asked for, which top group is evaluated, and how it is described.