The Psychology of Taxation

If you spend much time listening to the mainstream media, it often seems that everyone wants taxes to be raised on the wealthy.  After reviewing one recent study and some polling data, it appears that there are some important psychological factors are at play for this desire, rather than any reasoned concern about the positive or negative effects that increasing taxes might have on the economic growth of the nation.

As one recent article published in the Journal of Marketing Research has shown, human nature has an inherently anti-tax stance.  This study tested the extent to which people would go to avoid taxes, and ended up showing that people would literally waste money to avoid paying taxes.  Participants in the study were given two ways to purchase the goods they needed at discounted prices from two different stores. The first store would sell the goods at the largest discounted price, while the second store which was farther away from the participants would sell the goods without taxes.  While the no-tax discount amounted to a less of a discount than offered by the first store and required more driving to obtain the goods, more participants opted for the no-tax discount.  The study did note that conservative voters were more likely to choose the non-taxed goods, but since around 40% of Americans are conservative, it is reasonable to conclude that most dislike taxes.

Although it appears that anti-tax sentiments are very strong in America, it makes one wonder why people would waste money to evade taxes, when the majority of Americans actually favor increasing taxes on "the rich."  The resolution to this apparent paradox comes from a prevailing "taxes are good -- just not for me" attitude.  When President Obama talks about "the rich," he commonly refers to "millionaires and billionaires," or the "top 1% of earners," but in reality each individual has his or her own definition of what level of income makes a person rich.  As a survey conducted by Reason shows, people do not tend to see themselves as rich.  For example, those polled making under $25,000 annually defined "the rich" as those making $100,000 to $500,000 a year.  Those making $100,000-199,000 a year defined "the rich" as those earning between $250,000 and 5 million annually.  People making over $200,000 defined "the rich" as an income between $300,000 and $1 million.  Those polled making over $200,000 are the closest to what Obama defines as rich, and they certainly do want higher taxes.

They just don't want to be the ones paying them.

Matt can be contactedmpalumbo12@live.com

Open all references in tabs: [1 - 4]

Leave a Reply