🔎 Research Question and Argument
Despite very high levels of economic inequality, direct taxation in Latin America remains limited, constraining fiscal redistribution and the growth of welfare systems. This research proposes a novel explanation for that puzzle in democratic settings: higher levels of perceived inequality reduce popular support for a broad-based income tax, which in turn weakens incentives for governments to pursue mass taxation.
📊 Public Opinion Evidence From 18 Countries
- Empirical analysis draws on public opinion data covering 18 Latin American countries.
- A newly developed measure of perceived inequality is used to capture citizens' subjective views about economic gaps.
- The analysis tests whether variation in perceived inequality is associated with support for broad-based income taxation.
📌 Key Findings
- Higher perceived inequality is associated with lower public support for a broad-based income tax.
- Reduced public support implies weaker political incentives for policymakers to implement policies that expand mass taxation.
- These results hold across the multi-country sample and provide robust backing for the core argument.
⚖️ Why This Matters
- Offers a new angle on why Latin American states struggle to expand direct taxation beyond explanations that focus primarily on elite power.
- Highlights the importance of citizens' perceptions—rather than just objective inequality—in shaping fiscal preferences and the political feasibility of tax reform.
- Implications reach scholars of public finance, democratization, and policy reform: addressing perceptions may be as crucial as altering objective distributions when seeking viable tax-policy change.
