Taxing the Rich: Disentangling the Puzzle

What factors do individuals consider when thinking about taxing the rich? Despite several studies showing that inequality has increased in the past decades, marginal top tax rates have not gone back to the levels reached in the post-war period. A prominent approach in political economy suggests that individuals below the mean income should be willing to tax the rich. I argue, however, that individuals might tolerate inequality better than the current literature suggests. There are different characteristics of the rich that might undermine individuals’ self-interest in taxing this group. I propose three: the deservingness of the rich, the philanthropic use of money that they make and the efficiency costs that might derive from taxing them heavily. Using a conjoint analysis, I aim to explore how responsive individuals are to information about these three elements.