A randomized intervention to gauge preferred tax rates and progressivity

A key concern in high-inequality countries is whether greater tax revenue and progressivity could help to decrease inequality. Studies have shown that while people care about inequality, providing them with information about current levels of inequality or about specific policies has little impact on their preferences for redistribution. These preferences have usually been proxied by their preferences for government spending without any reference to taxation. In this study in Mexico, we take a novel approach by carrying out a randomized intervention in which we provide information related to (i) corruption, (ii) public health, or (iii) public safety. We then ask individuals about their willingness to pay higher taxes, and we ascertain their support for tax progressivity by asking about their preferred tax rates for the rich, the middle-income, and the poor. We find that willingness to pay higher taxes is affected only by the information on corruption and public health (2.56 and 2.89% points in additional taxes, respectively). We find that this information does not increase their preference for tax progressivity.