Do People Really Want a Simple Tax System? Evidence on Preferences Towards Income Tax SimplificationZEW Discussion Paper No. 19-058 // 2019
We study preferences for tax simplification using new survey and experimental data for a representative sample of the German population. General wisdom seems to suggest that most tax systems are overly complex and that tax simplification is generally desirable. Consistent with this general wisdom, we document in the first part of the paper that more than 90% of respondents believe that the tax system should be simplified. However, there also are efficiency and equity arguments in support of a certain degree of tax complexity. The second part of our paper then investigates if the high support for tax simplification is driven by a lack of awareness about the implications of tax simplification. Using randomized survey experiments and other survey techniques, we find that the support for tax simplification decreases in response to economic arguments against simplification and as we ask respondents if the tax system should account for specific differences in living situations. Overall, our findings suggest that people support tax simplification, but they do not necessarily demand the simplest possible tax system and have preferences to keep certain complexity-adding elements of the tax system.
Blesse, Sebastian, Florian Buhlmann and Philipp Dörrenberg (2019), Do People Really Want a Simple Tax System? Evidence on Preferences Towards Income Tax Simplification, ZEW Discussion Paper No. 19-058, Mannheim.