Flat Versus Graduated Tax Regimes: Economics-Based vs. Psychology-Based Explanations for Individual Preferences

  • Sarah C. Lyon
  • Thomas M. Dalton
  • Kenneth C. Dalton

Abstract

This study examines preference for a method of taxation under two competing theories; standard economic theory and optimism bias. Specifically, we focus on the contradiction between the tax rate structure taxpayers claim to favor when their decision does not involve self-interest, and the tax rate structure they actually choose when the decision does involve self-interest. We find that participants favor a flat tax rate over graduated tax rates in significantly higher proportions when the choice involves self-interest as opposed to a setting without self-interest.

Published
2019-01-30
How to Cite
LYON, Sarah C.; DALTON, Thomas M.; DALTON, Kenneth C.. Flat Versus Graduated Tax Regimes: Economics-Based vs. Psychology-Based Explanations for Individual Preferences. The Journal of Business Inquiry, [S.l.], v. 18, n. 2, p. 162-175, jan. 2019. ISSN 2155-4072. Available at: <http://journals.uvu.edu/index.php/jbi/article/view/302>. Date accessed: 25 aug. 2019.