All's fair in taxation: A framing experiment with local politicians

Tax and benefit systems commonly assign premiums to (socially) preferable states. For instance, having a child usually warrants a (cost-reducing) premium compared to remaining childless. These premiums may equivalently be achieved as positive benefits for the preferable state, or as taxes for the non-preferred state. However, perceptions of fair treatment of the rich and poor may differ with the frame. This paper contributes to the understanding of framing effects in tax and benefit system design by providing an empirical test with actual political decision-makers exposed to system-relevant considerations. Using a survey-experiment, we find participants (N=608) to grant higher premiums for having children to low income families in a benefit frame, but to high income families in a tax frame. A similar framing effect occurs in a second scenario based on real competencies of our respondents. In both scenarios the effect is moderated by the political ideology of participants' parties. Its occurrence among policy-makers raises concerns about imbalanced tax and benefit schedules being designed unintentionally despite (or because of) attention to social fairness.