The ICT revolution and preferences for taxing top earners

Abstract

ABSTRACT How has the ICT-driven transformation of labour markets in recent decades affected redistributive preferences? We move beyond existing research by focusing on the ‘winners’ of the ICT revolution and on other-regarding preferences for taxing top earners. We carry out an interactive, online experiment with around 3000 US respondents to test whether fairness perceptions and redistributive preferences differ when top incomes are gained through luck, routine work, or complex work. This set up aims to mirror the changing nature of tasks performed by high-earning workers in the US labour market as a result of the ICT revolution. We find that the desired tax rate on top earners is up to 5.3 percentage points lower for the complex work than the routine work treatment, and that high incomes from complex work are perceived as fairer and more deserved. A follow-up vignettes study then provides strong evidence that high-earning jobs are perceived to be more complex. Taken together, our findings highlight an important and previously under-explored channel through which the ICT revolution may have dampened demand for progressive taxation in the advanced democracies.