What Does the American Public Believe About Tax Policy? A Study of the Beliefs of the American Public on Issues of Vertical Equity, Optimal Tax Theory, and Positive Questions of Tax Policy

Gerald Prante

Advisor: Bryan D. Caplan

Committee Members: Garett Jones, Sarah E. Nutter, School of Management

Carow Hall, 11
April 06, 2010, 09:00 AM to 10:00 AM

Abstract:

This dissertation is composed of three essays analyzing the beliefs of the American public on tax policy. The first essay discusses the American public's beliefs on tax policies as they relate to the issue of vertical equity. The second essay discusses the systematic differences that exist between the general public's views and the consensus view of public finance economists on many specific issues. The third essay assesses the knowledge of the American public on verifiable questions of tax policy. The first essay finds little evidence for the role of self-interest in formulating views on specific tax policy measures, but does find evidence for pride driving beliefs on more general questions relating to the person's individual tax burden. Also, the first essay finds a role for party leadership's ability to affect the views of its members on tax policy. The second essay concludes that on issues of fundamental tax reform, as well as on questions of environmental tax policy, si gnificant differences exist between the views of the general public and the economists' criterion of optimal tax theory. The empirical evidence in the third essay indicates that the American public possesses satisfactory knowledge of the U.S. social insurance system and the overall size of its tax burden but a rather limited knowledge of the U.S. tax system's existing distribution and the distributional effects of specific tax policies. Overall, the empirical evidence presented in the three essays indicates that those with higher incomes, more education, and those who are male are generally most likely to be informed on tax policy and to agree with public finance economists in their judgment of which tax policies are optimal.