Why are high-income and low-income earners not significantly polarized in their support for progressive income taxation? This article posits that the affluent fail to recognize that they belong to the high-income income group and this misperception affects their preferences over progressive taxation.
International Social Survey Programme’s Social Inequality survey of 2009 reveals that almost 60% of American respondents with yearly household incomes higher than $110,000 support progressive taxation, whereas 63% of American respondents with annual incomes lower than $25,000 support progressivity.
One possible explanation is that people care about things other than material self-interest. Several influential contributions to the comparative politics literature have taken up the challenge of amending the utility function of the canonical model of redistribution. In particular, they incorporate another source of utility other than posttax and transfer income in the individual’s utility function. These studies posit that people’s decisions, along with material self-interest, are affected by altruism (Dimick, Rueda, and Stegmueller 2016), religion (Stegmueller 2013), beliefs about what is fair (Alesina and Angeletos 2005), group loyalty (Shayo 2009), and distaste for inequality (Lü and Scheve 2016).
I would like to go with the “we’re not all self-serving dicks” theories.
Why do a significant share of high-income respondents underestimate their rank? Why do the affluent think they belong to the middle class?
You have to adjust self-perceptions based on cost of living — my house may be worth a ridiculous amount on paper, but let me tell you, it is a piece of shit where they cut every corner they could. I am not exactly living like a queen, with my crumbling grout 1988-forest-green-tiled bathroom and honey-oak-veneer-cabinet kitchen with a coil stove and twenty year old fridge. Yes, I am rich in the global perspective, and even in the American perspective, but I still think of myself as middle class. Couldn’t I afford to remodel my kitchen if I was actually rich? (I suspect no one else middle class can either, they’re just willing to take out loans that I’m not.) But, I know I am better off than many, and want to pay my fair share.
But more to the point, I think she’s disregarding that class is not solely determined by income. Anyone who is a worker, not an owner or manager, is not truly upper class. Class is about control and influence as much as wealth. This is why well-off people may still think of themselves as middle class: the social connotations.
(I only skimmed the methods and results so maybe I missed something.)
In Seattle it’s popular to blame Amazon employees for making too much money and gentrifying the cool neighborhoods; poorer people definitely perceive them as upper class. I’ve also noticed this play out lately where people who have shitty jobs with shitty working conditions are cheering to see tech workers facing layoffs and cuts in benefits, like the ability to work remotely. (Stop applauding the owners dudes, it’s a bad look. We’re all working hard and you also deserve to be treated better. Remember who is at fault: the people who set your wages.)
So I agree with her that people take a relativistic approach to self-identification, reached through comparison with those who are wealthier, but I disagree that people are wrong in the conclusion they have drawn. They recognize that they lack the wealth and influence of the very rich. From farther away, it may seem appropriate to group them together with the very rich, but when it comes down to it, they are still workers.
Workers should be in solidarity with other workers, not owners — and by those numbers, they are. It’s unfortunate that the wealthier end of workers are perceived as an outgroup by the lower paid end of workers, when coming together could help raise them up too. Class warfare indeed.
