Taxing your cake and growing it too: public beliefs on the dual benefits of progressive taxation

Abstract

Political and economic elites often warn that taxes on the rich impair economic growth. Although such warnings have a long tradition in elite discourse, what the public believes about the effects of progressive taxation remains surprisingly understudied. This omission limits our understanding of a basic democratic mechanism, the congruence of elite and public opinion. To close this gap, we employ a conjoint experiment during the 2021 German national election on a representative quota sample. Participants compare policy packages that entail changes in income, inheritance, and corporate taxes and evaluate their impact on equality and growth. We find no evidence that the public believes that progressive taxes promote equality at the expense of growth. Instead, participants believe that progressive taxes are doubly beneficial, promoting both outcomes. Furthermore, such beliefs do not vary by ideology or economic status. Our findings suggest a more consensual view of progressive taxation that emphasizes positive synergies between economic growth and greater equality.