Public goods provision, preferences over public finance, and distributional effects

Abstract

This study uncovers a novel distributional effect of public goods through public opinions. We hypothesize that people are more likely to support a tax increase after realizing the benefit from public goods, helping to reduce inequality by expanding government size. We conducted an online survey wherein the treatment group was informed about the universal benefits of some public goods. We found that although the treatment substantially enhances support for a larger government, its impact on desired tax and spending progressivity is limited. Thus, increased perceived benefits might allow government to politically achieve redistribution through size expansion without reducing policy progressivity.