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Norm for redistribution, social capital, and perceived tax burden: comparison between high- and low-income households

Yamamura, Eiji (2012): Norm for redistribution, social capital, and perceived tax burden: comparison between high- and low-income households.

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Abstract

This paper explores how a perceived tax burden is influenced by the degree that neighbors prefer income redistribution. Further, this paper investigates how the influence of neighbors is affected by the degree of interaction between neighbors. For these purposes, individual-level data and place of residence data were combined. After controlling for individual characteristics, I obtained the following key findings: people are more likely to perceive the amount of tax as low when neighbors are more likely to support redistribution policies. Further, this neighbor effect increases when community participation rates are high. This tendency is clearly observed in high-income groups but not in low-income groups. This implies that the norm for redistribution leads rich people to consider the tax burden as low. Further, the effect of the norm increases when there is a greater accumulation of social capital within a residential area. That is, one’s perceived tax burden is influenced by psychological externalities.

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