Income tax and elections in Britain, 1950–2001

Abstract

The level of income tax has been an important campaigning issue in every election in Britain since 1950, and the tax record of government is widely held by politicians to be a determining factor in electoral outcomes. Political scientists, on the other hand, generally dismiss these views, and argue instead that taxation has not had a significant influence on voting behaviour in Britain. We examine the background to these divergent opinions, and show that they are based on inappropriate data about the incidence of income tax. We construct new time-series data on income tax trends for different income levels and household types, and then conduct statistical tests for any relationship between these tax data and election results. We show that there is no relationship between changes in the standard (or basic) rate of income tax and election results, but that there is a clear link at the aggregate level between the effective (or average) tax rate and electoral outcomes – an increase in the effective tax rate is associated with electoral defeat. We thus conclude that political scientists have been too ready to dismiss the perceptions of politicians that electoral behaviour is influenced by changes in income tax.