Inequality, information, and income tax policy preferences in Austria and Germany

Abstract Inequality has increased over recent decades in many advanced industrial democracies, but taxes have rarely become more progressive. One possible explanation for the lack of a policy response is that, despite rising inequality, voters support higher taxes on incomes weakly, if at all. Using original representative surveys in Austria and Germany, we elicit voters’ preferences over the progressivity of income tax policy and examine whether exposing them to accurate information about inequality affects those preferences. Voters, we find first, express an abstract preference for progressivity but concretely support tax plans that are only somewhat more progressive than the status quo in Austria and less progressive than the status quo in Germany. Second, we find evidence that certain kinds of information about inequality moderately increase progressive tax preferences in Germany; however, we find no equivalent effects in Austria. While information on inequality does seem able to affect tax policy views in certain contexts, it seems unlikely that lack of this information can fully account for the lack of rising redistribution through the income tax system in the face of increasing inequality.