Tax salience and preferences for redistribution

Last registered on April 14, 2022

Pre-Trial

Trial Information

General Information

Title
Tax salience and preferences for redistribution
RCT ID
AEARCTR-0008696
Initial registration date
December 20, 2021

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
December 23, 2021, 9:52 AM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Last updated
April 14, 2022, 6:34 AM EDT

Last updated is the most recent time when changes to the trial's registration were published.

Locations

Region

Primary Investigator

Affiliation
Higher School of Economics National Research University

Other Primary Investigator(s)

Additional Trial Information

Status
Completed
Start date
2021-12-24
End date
2022-02-25
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
We investigate whether the awareness of the taxes that one pays is linked to preferences for redistribution and social policy. We intend to carry out a survey experiment in Russia - a country where a significant fraction of individual payroll taxes is paid by the employer and is in effect hidden from the taxpayer. The participants are assigned to one of two treatment arms: the treatment group where the participants are shown a video with a calculation of total amount of tax and social security payments that typically arise from his or her salary, and a control group with the video showing only the highly visible income tax. We also elicit several survey-based measures of tax literacy, and aim to analyze how information provision and tax knowledge in general translate into redistribution demand and attitudes toward government spending, as well as one's willingness to take civic action and hold the government accountable.
External Link(s)

Registration Citation

Citation
Zakharov, Alexei. 2022. "Tax salience and preferences for redistribution." AEA RCT Registry. April 14. https://doi.org/10.1257/rct.8696-4.0
Experimental Details

Interventions

Intervention(s)

Intervention Start Date
2021-12-24
Intervention End Date
2022-01-31

Primary Outcomes

Primary Outcomes (end points)
Preferences for redistribution, beliefs in government efficiency, trust toward government, future political and economic action
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
We plan to survey N=2000 Russian Internet users; the survey will be administered by a marketing research firm. The sample will be stratified according to gender, age group (18-29, 39-39, 49-49 and 50+), and federal district (group of regions; there are 8 federal districts in Russia). The survey will be carried out in December 2021. The survey will take approximately 12 minutes to complete and will contain a pre-treatment part, a randomized treatment, and a post-treatment part measuring our variables of interest.

The pre-trial part of the questionnaire will include questions on socio-demographic background; political beliefs; cognitive style; trust toward experts; awareness of and experience with the Russian tax system.

This will be followed by the randomized tax information treatment. Respondents will be shown a 1-minute video with a calculation of the actual amount of taxes arising from their salary. For one half of the respondents, the calculation will only include the highly visible 13% income tax. For the other half, the calculation will also include the social insurance, amounting to some 30% of the salary, paid by the employer.

In the post-treatment part of the survey, we will ask a number of questions about one's the preferences toward government spending and redistributive policies. We will look at different aspects of redistributive preferences - attitudes toward the provision of transfers to people at the bottom of the social ladder (``redistribution to'') and the taxation of people at the top of the social ladder (``redistribution from''). There will be a question about whether government spending is too high, and questions about the belief in the need to increase or decrease government spending on specific needs. Questions will be asked regarding specific redistribution policies (the minimum wage and the food stamps), to measure generic beliefs about inequality and fairness of the economic system, to assess one's readiness to make charitable contributions or do unpaid work, to measure the perception of one's place in the income distribution, and to measure the belief that luck rather than effort is more important in determining life outcomes. There will be questions on the satisfaction with the government, satisfaction with the quality of public good provision, and the belief that the government spending is used for right purposes. Finally, we will ask about the individual's likelihood of future political (voting in elections, making donations to parties, participation in the management of their building, complaining about authorities) or economic (becoming entrepreneur, changing a job, working more or less, working abroad) action.

Up to N=1000 respondents will be recontacted six weeks later in a follow-up survey. The follow-up questionnaire will include some of the questions from the post-treatment part of the survey and will not involve new experimental interventions.
Experimental Design Details
In the pre-treatment part we will ask about two types of taxes arising from salaries of Russian workers. First, it is the highly visible 13% income tax. Second, these are (generally tax-like) social insurance payments that usually amount to 30% of the nominal salary, and are paid by the employer. There will also be a question on the amount of the 20% value added tax that is paid from the sales of all finished goods and services. There will be questions on the experience of filing tax returns and whether one visited a tax office during the past year. We will also ask several questions to determine whether the individual's employer qualifies for reduced social security payments. In addition, we will ask if the primary source of Russia's state budget is oil/gas revenue or taxes on individuals and enterprises; this latter question measures the individual's belief about the relationship between taxes paid by individuals and firms on one hand, and government spending on the other.

Sample treatment video text: ``All Russians pay taxes. Consider a Russian with a monthly salary of 70000 Roubles --- the same amount as you indicated in the questionnaire. After subtracting the income tax, the worker is left with a net income of 60900 Roubles, while the income tax is 9100 Roubles. [This is almost one seventh of the worker's net income./However, the amount of taxes paid from one's salary is much larger. As a rule, the employer pays the state at least 21000 Roubles as social insurance. This is largely a tax on the income. As a result, the government takes in a total of 30100 Roubles. This is almost one half of the worker's net income.] The government expenses are financed by [this/these] and other taxes.''

Perception of tax burden: ``With which of the statements below do you agree? You and your family members are paying too many taxes/In Russia, taxes are lower than in most European countries.''

Redistribution preferences: Taxing the rich. ``With which of the statements below do you agree? [Russia needs a progressive tax system, where people who earn more should pay a larger share of their income in taxes/The taxes paid by the well-off Russians should be higher]''

Redistribution preferences: Helping the poor: ``Some people believe that the government has numerous obligations to its citizens. According to others, government resources are limited. Please tell me, how much do you agree or disagree the government should [Provide a decent standard of living for the unemployed/Provide housing to all everyone who needs it/ Provide financial help to the poor]''; ``Currently, an idea to introduce food stamps for low-income citizens is under discussion. The people in need will have a special card with which they will receive points from the federal budget to buy specific foodstuffs. These points will not be used to buy alcohol, cigarettes or other harmful products. Do you think such cards should be introduced? Definitely yes/Maybe yes/Maybe not/Definitely not.''

Redistribution preferences: Inequality beliefs. ``With which of the statements below do you agree? Income differences between rich and poor Russians are too large and should be smaller than they are now.''

Redistribution preferences: Altruism. ``Imagine you unexpectedly received 30000 Roubles. How much of that sum would you donate to

Redistribution preferences: The minimum wage. ``The minimum wage is the legally defined minimum amount one can receive in a month. In most of Russian regions it is equal to the nationally defined minimum of 12792 Roubles per month. What do you think the national minimum monthly wage should be? Less than 12792 Roubles per month/It should be kept at the current level/From 12793 to 15000 Roubles/From 15001 to 20000 Roubles/From 20001 to 25000 Roubles/From 25001 to 30000/From 35001 to 40000 Roubles/From 45001 to 50000 Roubles/Over 50000 Roubles''

Future plans: Charity. ``Please tell us whether or not in the future you intend to [take part in any charitable activity/do volunteer work (meaning unpaid work, such as in crisis centers, hospitals, nursing homes, social services]: Definitely yes/ Rather yes/ Rather no/ Definitely no''

Views on government spending. ``With which of the statements below do you agree? Russian government spending is too high''; ``The Russian state budget is limited. There is always an argument on whether specific government needs should receive more or less funding. In your opinion, which of the following budget categories receive too little funding, too much funding, or the right amount of funding? National defense/Social assistance, including pensions and various social transfers/Health care/Education/Security organs, law enforcement and interior forces/Public utilities/Road infrastructure and public transportation]: Too little/Too much/The right amount.''

Views on government and satisfaction with the provision of public goods. ``How much do you trust [President of Russia/Russian government/your regional government]: Completely trust/Somewhat trust/Somewhat distrust/Completely distrust''; ``Please tell me whether you are satisfied with [Quality of communal utilities (heating, water supply, maintenance of your building) supplied in your place of residence/ Quality of roads in our country/ Quality of public transport in our country/ Health care system in our country/ The work of law enforcement in our country/ The work of courts in our country/ Education system in our country]: Definitely yes/ Rather yes/ Rather no/ Definitely no''; ``Do you believe that in today's Russia money from the state budget is spend generally in the right or wrong way? Right/Wrong''

Perceived role of luck. ``Where would you place your opinion on this scale? 1 - Hard work leads to a better life/2/3/4/5 - Hard work doesn't generally bring success - it's more a matter of luck and connections.''

Interpersonal utility comparison. ``With which of the statements below do you agree? You are earning more than the majority of Russians.''

Future plans: Political action. ``Please tell us whether or not in the future you intend to [sign petitions/file complaints about unsatisfactory work of city or municipal authorities/vote in elections of any level/participate in the meetings of homeowners associations/make donations to political parties, projects or organizations]: Definitely yes/ Rather yes/ Rather no/ Definitely no''

Future plans: Economic action. ``Please tell us whether or not in the future you intend to [open my own business, become an entrepreneur /change my place of employment/work more than I do today/work less than I do today/seek employment abroad]: Definitely yes/ Rather yes/ Rather no/ Definitely no''

Future plans: ``Please tell us whether or not in the future you intend to get a Covid vaccine''

The follow-up survey will include the tax knowledge questions; Interpersonal utility comparison; trust toward government institutions; views on government spending; redistribution preferences except altruism; future plans: work more/less, take part in homeowners meeting, donate to political parties, get a Covid vaccine

Hypothesis 1: Manipulation check. The treatment adjusts upward the beliefs about one's tax burden. Individuals in the treatment group to be more aware of the taxes that they are paying - hence, they will be more likely to say that the taxes they are paying are too high, and less likely to say that the Russian tax burden is lower than in most European countries.
Hypothesis 2: Government efficiency. Higher tax awareness is associated with a lower level of satisfaction with the provision of public goods, the belief that the government is less efficient, and lower approval of government institutions.
Hypothesis 3: Pro-redistribution views. Higher tax awareness to be associated with less pro-redistribution views and more negative attitudes toward government spending.

We expect the magnitude of the treatment effect to depend on several variables.
Hypothesis 4a: Moderation by political views. The effect of tax awareness and information treatment will be stronger in individuals who believe that the country is going the wrong way.
Hypothesis 4b: Moderation by cognitive style. The effect of tax awareness and information treatment will be stronger in individuals with more analytical cognitive style, and weaker in individuals with more intuitive style.
Hypothesis 4c: Moderation by prior beliefs. The effect of information treatment will be stronger in individuals who held lower prior beliefs about the amount of taxes that are accrued from a salary.
Hypothesis 4d: Moderation by anti-intellectualism. The effect of information treatment will be weaker in individuals who distrust experts and have stronger anti-elite attitudes

We will then explore the channels through which information about the tax burden affects the preferences for redistribution.
Hypothesis 5a: Mediation by state efficiency. We expect that the effect of the treatment on pro-redistribution views is mediated by the government efficiency beliefs.
Hypothesis 5b: Mediation by interpersonal utility comparison. The effect of the treatment on pro-redistribution views is mediated by the the belief that the individual is earning more that the majority of Russians.
Hypothesis 5c: Mediation by perceived role of luck. The effect of the treatment on pro-redistribution views is mediated by the the belief that one can get ahead in life by luck rather than hard work.

Hypothesis 6: Civic and political participation. Higher tax awareness is associated with greater intention to vote and participate in civic initiatives.
Hypothesis 6a: Civic and political participation. The effect of tax awareness on civic and political participation is mediated by the beliefs about government efficiency.
Randomization Method
Randomization will be done by a computer
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
2000 individuals
Sample size: planned number of observations
2000 individuals Up to N=1000 participants will be recontacted six weeks later in a followup study
Sample size (or number of clusters) by treatment arms
All survey participants will have 50% probability of being assigned into either one of two treatment arms

There will be no experimental interventions during the follow-up study
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials

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IRB

Institutional Review Boards (IRBs)

IRB Name
Institutional Review Board of the National Research University Higher School of Economics
IRB Approval Date
2021-11-12
IRB Approval Number
N/A
Analysis Plan

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Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
Yes
Intervention Completion Date
December 27, 2021, 12:00 +00:00
Data Collection Complete
Yes
Data Collection Completion Date
December 27, 2021, 12:00 +00:00
Final Sample Size: Number of Clusters (Unit of Randomization)
2016 respondents in an online survey
Was attrition correlated with treatment status?
No
Final Sample Size: Total Number of Observations
2016 respondents in an online survey
Final Sample Size (or Number of Clusters) by Treatment Arms
1000 treatment, 1016 control
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
No
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials