(Mis)Perceptions of Inequality, Housing Wealth and Tax Preferences Across Europe: Experimental Evidence
Type
conference paper
Date Issued
2022-09-25
Author(s)
Abstract
The role of wealth in shaping political preferences is poorly understood, especially in a cross-national perspective. In this paper we study the (mis)perceptions of inequality and tax preferences of people in 7 European countries, using a novel survey experiment. We focus in particular on the role of housing wealth-which accounts for the bulk of household wealth for most people-in shaping preferences over income, inheritance, wealth, and capital gains taxation. We find that respondents tend to overestimate income inequality but have fairly accurate perceptions of wealth inequality on average. Higher perceived inequalities predict more progressive tax preferences. Older, female, and higher income respondents are less likely to overestimate income inequality, whereas those who perceive themselves to be more wealthy are more likely to overestimate income inequality. Exposing people to information about the level of income and or wealth inequality in their country and thus correcting their (mis)perceptions only has a limited effect on their preferences. Using a forced-choice conjoint experiment to find out how people trade off income and inheritance taxation, we find that keeping the income tax burden low takes precedence even for high-wealth individuals who stand to pass on or receive a substantial inheritance.
Language
English
Event Title
Wealthpol - Banklash Conference
Event Location
Oxford
Event Date
30-09-2022