Perceptions and preferences about income taxes

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## Perceptions and preferences about income taxes: A factorial survey approach

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Julio Iturra Sanhueza - BIGSSS 
[jiturra@bigsss.uni-bremen.de](jiturra@bigsss.uni-bremen.de)
 
Juan Carlos Castillo - Universidad de Chile
 
Luis Maldonado - Pontificia Universidad Católica de Chile
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.small[ESRA Conference - 18th July 2023]
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## .red[Perceptions and preferences about income taxes
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1. Introduction
2. Hypotheses
3. Methodology
4. Results
5. Discussion
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## .red[Perceptions and preferences about income taxes
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1. .yellow[Introduction]
2. Hypotheses
3. Methodology
4. Results
5. Discussion
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### Attitudes toward economic inequality
 - Subjective inequality (Janmaat, 2013)
 - Perception (_How is it_) 
 - Preference (_How it should be_)
 - Perception anchors economic inequality justification (Wegener, 1987;Castillo, 2011) 
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### Public support for taxation
  - Self-interest and policy support (Meltzer & Richard, 1981; McCall & Kenworthy, 2009)
  - Deservingness opinions: merit and need (Van Oorschot, 2000;Sachweh & Eicher, 2023) 
    
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##.yellow[.small[_What is the role of self-interest and deservingness opinions on perceptions and preferences about income taxes?_]]

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## .red[Perceptions and preferences about income taxes
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1. Introduction
2. .yellow[Hypotheses]
3. Methodology
4. Results
5. Discussion
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## Hypotheses

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> H1: Higher status vignettes will obtain a larger preferred income tax.

> H2: Respondents of lower status will perceive lower income tax.

> H3: Respondents of higher status will prefer less income tax than those of lower status

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* Pre-registration: [https://osf.io/vpz86](https://osf.io/vpz86)
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## .red[Perceptions and preferences about income taxes
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1. Introduction
2. Hypotheses
3. .yellow[Method]
4. Results
5. Discussion
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## Data and methods
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.bold[Data:]

* Online panel survey using quotas (Age, Gender, Education). 
* Chile - 2019 ( `$N$` = 1858) 
* _Method:_  Multilevel regression models   
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.bold[Vignette design:]

- 8 dimensions 
- D-efficient solution ( `$D$` = 99.7) 
- sample of 120 vignettes  
- 10 Decks containing 12 vignettes each 
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### Dimensions
 
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![:scale 49%](images/dimensiones.PNG)

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## Vignettes and outcomes

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> Mr. Pailahueque is 55 years old, he studied in a municipal school and completed postgraduate studies. He has two children and his mother completed high school. He currently receives a gross monthly salary of $655,000 pesos.]

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After the presentation of each description, two questions are asked:   
 - How much do you think the person described **currently pays** in income tax?
 - How much do you think the person described **should pay** in income tax?

The answers to these questions should be answered with amounts in Chilean pesos.

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.medium[**Note:** In Chile (2019) people with a earned income **below** $669,910 (monthly) are exempt from income  taxes]
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### Perceptions and preferences about taxes

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- Responses with a value of $0 are present for both perceptions (~18%) and preferences (~30%) about income taxes

- Perception: around 15% response accuracy (vig's `$\le$` $655,000)

- For modelling zeros (add a constant value of `$k_i$` = 1):

`$$I_{tax}= \ln\big(\text{income tax} + k_i\big)$$`

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.center[![:scale 100%](images/tax_density.png)]

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## Independent variables
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### Vignettes (L1)

* sociodemographic

* SES and SES of origin

* number of children

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### Respondent (L2)

* educational level

* household income quintile

* sociodemographic

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## .red[Perceptions and preferences about income taxes
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1. Introduction
2. Hypotheses
3. Methodology
4. .yellow[Results]
5. Discussion
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### Results

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## .red[Perceptions and preferences about income taxes
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1. Introduction
2. Hypotheses
3. Methodology
4. Results
5. .yellow[Discussion]
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### .red[Dicussion]

- SES of *origin* (School as status marker) and *current* SES (income) of vignettes increases tax preferences (H1 ✓).

- *Need* as the number of children decreases income tax preferences

- *Respondent status:* R's Education matters only for higher perceived income taxes (~H2), but not for preferences (H3 ✖)
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### .red[Future research]

- alternative models for accounting for $0 in DV

- the role of perceptions and preferences about **meritocracy**

- longitudinal analysis employing second wave 
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# Thank you!

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.yellow[More information:

[jiturra@bigsss.uni-bremen.de](jiturra@bigsss.uni-bremen.de)

[bit.ly/factorial-taxes](bit.ly/factorial-taxes)

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## Perceptions and preferences about income taxes: A factorial survey approach

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.small[ESRA Conference - 18th July 2023]
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