The Political Economy of Progressive Air Travel Taxation

Negative externalities such as those generated by air travel are typically addressed through linear Pigouvian taxes, yet these instruments are often set below optimal levels, face low public acceptability, and generate fairness concerns. Nonlinear progressive externality taxes, such as frequent flying levies, in which the marginal tax rate increases with the level of externality-generating activity, may improve both efficiency and political support. In this study, we examine public support for the linear versus progressive taxation of flights using a survey experiment with 9,000 participants from the general population in the United States, Germany, and Spain. In an information treatment, we provide respondents with information on the distribution of flights in their respective country and their position within them. We then examine the effects of this information on support for progressive taxation as well as its perceived fairness. We also study how these responses vary according to individuals' accuracy in estimating their flight consumption rank, as well as the direction of their potential misperceptions. To contrast progressive designs with alternative nonlinear schemes, we repeat this experimental design using a regressive tax schedule.