Study: Despite What You Think, You Don’t Really Hate Paying Taxes
- Posted on April 16, 2012 at 10:30pm by
Becket Adams
- Print »
- Email »
Okay, let’s face it: we all hate paying taxes and the less we have to pay, the happier we are, right? Apparently not.
According to a new study titled “Tax affinity hypothesis: Do we really hate paying taxes?” we may not hate paying taxes as much as we think we do.
We’ll give you a minute to compose yourself.
“People would prefer to keep a dollar than pay it in tax,” the study’s authors, Iwan Djanali and Damien Sheehan-Connor, write, “but paying it in tax is not equivalent to throwing the money away.”
The report argues that while most (if not all) taxpayers would prefer to hold on to their own money, there is some benefit to paying taxes.
“Economists generally assume that human beings get ‘zero utility’ from paying taxes,” Djanali said in an interview. “Zero utility is econ-speak for, ‘You get no benefit out of it.’ Obviously, consumption gives you a lot of utility. If you buy an apple, it satisfies your hunger.”
“We believe that paying taxes also gives you some utility, even though you’re enjoying less consumption,” he added.
“You get some ‘soft utility’ out of it. We call this ‘the warm glow.’ You feel good about helping others, even though you don’t get a direct monetary reward out of it.”
Yeah. Definitely feeling a “warm glow” right now.
Tom Jacobs of Miller-Mcune describes an experiment (called the “tax affinity hypothesis”) Djanali performed to prove his theory:
Sixty-six undergraduates were paid cash to perform a simple but tedious task: Shading in small circles. During six rounds of five minutes each, they were given a fixed sum for each circle they filled in.
For certain rounds, participants were paid at a higher rate — but they were also “taxed” on their earnings, and those taxes ate up all of the difference.
“For every participant, there is one round where there’s no tax, and you make four cents for every circle that you shade,” Djanali explained. “Then there’s another round where you’re paid five cents for every circle that you shade, but there’s a 20 percent tax. So the outcome, the after-tax wage, is the same — four cents per circle.”
Now normally, you’d assume the participants would work just as hard in both conditions because the payout would be the same, right? Nope. Turns out participants worked “significantly more in the presence of tax,” according to the study.
It’s important to note that before the “taxed” rounds began, participants were made to read the following:
You may treat the tax deductions similar to the income tax you pay from your on/off campus jobs. Tax money is used by the government to fund public services and infrastructures. Tax also has a redistributive feature, as it channels some income from the rich to the poor.
“This reminder apparently acted as an incentive to productivity — even if the workers didn’t realize it,” Jacobs writes.
Wait. Do GSA employees living it up in Vegas fall under the “infrastructure,“ ”public services,“ or ”redistributive” category?
So what did the study find?
Asked if they thought they worked harder during the “taxed” rounds, less than a third answered yes, which is odd considering the fact that “most of them did work harder in those rounds,” according to the study.
“This implies that people may respond to incentives even when they are not aware that they are doing so,” the study claims, “Among those who said yes, most claimed that the added incentive of knowing that some money would go to a good cause influenced them to work harder.”
Sheehan-Connor addresses the question of whether some workers were “responding only to the higher base rate as a sort of ego gratification”:
Perhaps an individual who receives 5 cents per circle with a 1 cent per circle tax works harder than someone with a 4 cent per circle wage and no tax because he interprets that his contribution is “worth more” due to the higher wage.
And that is exactly right from a social point of view: his contribution (per circle) is worth 4 cents of his own consumption and 1 cent of public consumption. A more traditional economic theory would say that he shouldn’t care about that 1 cent of public consumption and thus shouldn’t care about anything other than the 4 cents he is receiving. But our results show that he takes that extra cent that he does not receive into account.
However, perhaps the most interesting aspect of the study is the political takeaway.
“One of the biggest issues in political debates around tax reform is whether higher taxes are a disincentive to work,” Djanali said. “The argument is when you tax people so high, they’re less willing to work.”
Well, that’s not strictly true. It’s not that people are going to stop working altogether. It’s that they will find ways around high taxes which oftentimes involve things like job outsourcing and clever tax dodges like the infamous “Dutch Sandwich.”
“What we’re saying is, yes, it would reduce incentive to work,” Djanali continued, “But the reduction will not be as large as you might think, because people get some utility out of paying taxes. So this could have an impact on policy discussions.”
And there’s one last point: the study’s authors advise against making taxes less visible via value-added taxes.
“Our findings suggest that [to the contrary] it might be better to make taxes more visible – to make it really clear what people are paying for,” Djanali said.
Indeed, in the interest of advancing the tax debate, we couldn’t agree more with this proposition.
Popular Stories
Paper Details Obama Admin’s Alleged Secret Note Sent to Iran: If Israel Attacks, We Won’t Get Involved 586 Comments
‘Made Up Religion’: TV Historian Enrages Muslims, Receives Threats After Producing UK Documentary Questioning Islam’s Beginnings 413 Comments
This Is the Creationists‘ Response to Scientist Bill Nye’s Viral Pro-Evolution Video Claiming They Harm Children 412 Comments
Roseanne Barr: Most Billionaires ‘Violent Pedophiles’ & ‘Heartless’ Cocaine Addicts 375 Comments
President Obama Issues Major ‘Green Energy’ Executive Order 370 Comments
Faith
- This Is the Creationists‘ Response to Scientist Bill Nye’s Viral Pro-Evolution Video Claiming They Harm Children 412 Comments
Pakistani Muslim Cleric Accused of Framing Disabled Christian Girl in Koran-Burning Case Read More- ‘Made Up Religion’: TV Historian Enrages Muslims, Receives Threats After Producing UK Documentary Questioning Islam’s Beginnings 413 Comments
Meet the Controversial German Imam Accused of Brutally Beating His Wife & Pushing Sharia Law Read More
‘Self-Proclaimed Messiah’ & Unification Church Leader the Rev. Sun Myung Moon Has Died — Here’s His Life Story Read More
Business
- President Obama Issues Major ‘Green Energy’ Executive Order 370 Comments
- Germany’s Upcoming Court Ruling Will be Huge for the EU Read More
Ford Looks to Beat Toyota for Best-Selling Car in 2012 With This Model 151 Comments
Bernanke & QE3: Here’s What You Need to Know Read More- ‘Extortion’: Why Did the Labor Department ‘Drop the Hammer’ on Oregon Farmers? 303 Comments
Technology
- This Is the Creationists‘ Response to Scientist Bill Nye’s Viral Pro-Evolution Video Claiming They Harm Children 412 Comments
‘TaserDrone’: Hackers Weaponize Quadcopter With Actual ‘Shocking’ Technology Read More
Ever Heard of the Wild ‘Burning Man’ Festival in the Middle of the Nev. Desert? Here’s Your Primer Read More
Stanford Develops Technology ‘Better Than Steroids’ for Athlete Recovery Read More
Have You Pretended to Know What ‘the Cloud’ Is? You’re Not Alone Read More
Submitting your tip... please wait!
Comments (104)
Dougral Supports Israel
Posted on April 16, 2012 at 11:43pmSo in the wake of a study like this geniuses like Hilda Solis will tell us that not only do the rich want to pay more taxes, we all do. This is the kind of garbage academics that makes me despair for the future of our nation. The real answer lies in history, socialist and communist economies tend not to do very well since people don’t care about “public” money as much as they do their own.
Report Post »My Two Cents
Posted on April 16, 2012 at 11:40pmDjanali and Sheehan-Conner are idiots. That’s what I think.
Report Post »fastfacts1
Posted on April 17, 2012 at 1:02amAND YET WE PAY FOR BIDEN TO SAY THE DUMBEST THINGS… LOOK WHAT HE SAID TODAY…
Report Post »( http://www.thedailycandidate.com/video/2012/apr/biden_bad_lip.html )
Marci
Posted on April 17, 2012 at 1:33am“Economists generally assume that human beings get ‘zero utility’ from paying taxes,” Djanali said in an interview. “Zero utility is econ-speak for, ‘You get no benefit out of it.’ Obviously, consumption gives you a lot of utility. If you buy an apple, it satisfies your hunger.”
These guys are MORONS. Who do they think they are talking to?? I guess they are speaking to the morons who voted in hope and change. This doesn’t change the fact that taxes should only support a small government providing services as outlined in the Constitution. Not a year round Congress, a president who thinks he is King along with his b* wife, and certainly not the GSA which made it clear in their cute little videos why they felt THIS administration was the best ever. Corruption likes corruption. My thoughts are Djanali is a socialist ***** and he is grooming his next victims.
Report Post »Baddoggy
Posted on April 17, 2012 at 3:21amHitler also said that his men enjoyed cooking the jews in the ovens too. Propoganda always works on people with no morality.
Taxation is theft…PERIOD.
Report Post »kaydeebeau
Posted on April 17, 2012 at 6:01amWell, here’s another thought. Since the circle fillers knew that 20% of their incomve was to be confiscated, perhaps, they knew they had to work harder to achieve the same net outcome.
Another insteresting conclusion from the survey would suggest that the answer to eliminate poverty is hard work. Though, I think that idea was described several thousand years ago in the Bible…..
Report Post »thunder4570
Posted on April 17, 2012 at 6:54amAll this was is a chance to see if people will work for pennies! the test is wrong ,so what they took 20% it was a penny. Let them earn 1,000 and then take 20% and see how they react.If you really want to know what people think about taxes give them the whole $1000 and make them physicaly pay the tax instead of automaticaly withholding the tax so people have no concept of what they are really paying.
Report Post »lukerw
Posted on April 17, 2012 at 7:56amIn the Theology of Socialism… Everyone should work for Fun of having something to do… to support the Glorious Government… that takes care of Every need & want! And, those who do not fit this model… are Terminated!
Report Post »johnjamison
Posted on April 17, 2012 at 8:03amOther than the money that help supply the military which I feel is a necessity. I feel all other taxes are nothing more than the federal government stealing from me. And as this articles points out that exactly what they are doing. Stealing from privates citizens to create an army of federal workers that will always vote to increase the size and scope of government.
Report Post »Bottom line is THE ONLY PEOPLE WHO ACTUALLY PAY INTO THE SYSTEM ARE PRIVATE CITIZENS ALL TAX DOLLARS COLLECTED FROM THESE GOVERNMENT LEECHES ARE PAID WITH TAX DOLLARS FROM PRIVATE CITIZENS.
Point being federal workers shouldn’t be taxed,they should lose their rights to vote and be paid a flat rate salary. And only the people who are actually working in the private sector should be able to vote as all of the federal governments income that’s not barrowed comes from them.
SpankDaMonkey
Posted on April 17, 2012 at 8:11am.
Report Post »I think they were High……..
Ruler4You
Posted on April 17, 2012 at 10:13amThis article “IS” stupid. Paying taxes “IS” not about transferring money money to “needy” Americans. I pay taxes without making a big stink for a couple of reasons.
1). I’ve seen what the IRS does to people it feels “don’t” pay their taxes.
2). I expect my government to protect this nation. And fielding a standing military “IS” critical to that end. My fellow soldiers must be compensated for that sacrifice.
and number three, last but certainly not least
Report Post »3). every employer in the nation is a designated defacto “with holding agent” for the IRS. The money “IS” stolen from me before I even get compensation for MY labor. And my employer “IS” held accountable by the IRS for that revenue.
I support God's Israel!
Posted on April 17, 2012 at 11:51amI feel good about helping others WHEN I PERSONALLY DECIDE TO HELP THEM MYSELF BY GIVING INDIVIDUALLY AND NOT THRU THE IRS!!!!
The American people, at least a lot of them don’t know that THE IRS IS NOT A GOVERNMENT AGENCY. It is independent with a contract with the U.S. Feds.
Report Post »johnjamison
Posted on April 17, 2012 at 1:00pmIt cost the tax payers 1.50 to give .50 cent to the poor via through paying all the agencies in between.
Report Post »gperky
Posted on April 17, 2012 at 1:22pmI think you are correct. I also think that there is more to this than what is published. I would bet that they were all given a speech beforehand that if they colored in the taxed circles, they would be “helping” others. If so, that would certainly explain the outcome. If they were just told they would be “taxed”, I doubt the participants would have done so. I personally would have colored all as quickly as possible without discriminating between the two.
Report Post »black9897
Posted on April 17, 2012 at 6:06pmSo glad I read this. This whole time I thought I didn’t enjoy having money taken from me under threat and duress from a Criminal organization. Stupid me.
Report Post »SERUM
Posted on April 16, 2012 at 11:31pmI liked paying taxes cause it made feel like a “big boy”…but this works too!
Report Post »seeker9
Posted on April 16, 2012 at 11:30pmCan’t the poor fill in the circles (work) just as good as me? Don’t think it would take much training or education. We could all be equally responsible and equally taxed and equally poor.
Report Post »The Eleventh Doctor
Posted on April 16, 2012 at 11:26pmSo then if I ever get held up at gunpoint and asked for money, I can say I’m really happy about having my money stolen?
Report Post »jzs
Posted on April 16, 2012 at 11:40pmYawn. Of course the average American, Christian and altruistic, doesn’t mind paying taxes. It’s those who seek money above all other things who care. That’s why the very richest, those people who need money less the anyone else, are the strongest supporters of tax breaks for the rich, and who are willing to pay billions to brainwash people like you and me to think that we should pay more taxes so that they can have lower taxes.
Report Post »seeker9
Posted on April 16, 2012 at 11:48pm@JZS
Report Post »Look, it is the demo-marxists doing all the brain washing for higher taxes. Even BHO takes advantage of tax provisions, even though he could afford not to. He is not doing his “fair” on taxes.
The Eleventh Doctor
Posted on April 16, 2012 at 11:52pmActually, I was thinking it was because it’s my money in the first place, since I worked for it. If someone worked for their money, they should be allowed to keep it. Rich or poor, I don’t care.
Report Post »Silversmith
Posted on April 17, 2012 at 12:02am@JZS Yawn. There you go again.
I would not mind paying taxes at all if it weren’t that they were being used as payola or just plain wasted on damaging programs and parties. A fiscally responsible government would have my happy support. We don’t have one of those.
Silversmith
Report Post »hidden_lion
Posted on April 17, 2012 at 6:32amIt isn’t paying taxes that bothers people as much as the waste of those taxes by the government. The study should add a round where they explain the tax will be used to build turtle tunnels, attack foreign nations, and fund large expensive parties for government agencies…then lets see how hard they work.
Report Post »Obama_Sham
Posted on April 17, 2012 at 7:13am@JZS
“That’s why the very richest, those people who need money less the anyone else”
Really?!? So, who decides this?!?
Report Post »possom
Posted on April 16, 2012 at 11:23pmI love paying tax’s especially when I go to the grocery store to spend my $50.00 on bread balogna and top ramon for the next two week‘s and the guy infront of is spending 300 dollar’s in foodstamp‘s to buy steak’s and assorted garbage with my tax money!
Report Post »RepubliCorp
Posted on April 17, 2012 at 3:52amAgree
Report Post »Netsurfer2
Posted on April 16, 2012 at 11:20pmIt’s indescribable how our Social Security has ripped us off in what we have put into! The Governments that govern our Stat and local principalities have said time and time again that they are broke! Many people who make well above what I do in life don’t pay any taxes? They waste our money by throwing it over seas into other countries for free. They waste our money while putting on lavish parties and taking vacations. They waste our money by paying pensions that only of a King would ever get. Heck, even the entry level police make more than my wage and the benefits out weigh anything I would ever get! While I work hard in life supporting these vampires, I even wonder what is the purpose of taxes when those who make so much more don’t even know how to save their money, live high on the hog and are heavily in debt to begin with! I continue to live on a thread with no debts while saving my money and wondering why I can never get ahead. Almost like the managers leading the managers, the blind leading the blind! And for what for???
Report Post »NLN
Posted on April 16, 2012 at 11:16pmWrong. I just sent my check to the IRS so the government could blow it on useless programs. Like spending a couple of hundred thousand on moving a stupid bush, like Glenn talked about on his radio show.I don’t fell good about paying taxes, in fact I am pi**ed off.
Report Post »NLN
Posted on April 16, 2012 at 11:32pmI am sorry about the first post that I made. I got to thinking what a greedy pr**k I was to make such a statement. In fact tomorrow I am going to sell my house, truck, guns, my little plot of land that is a struggle to keep because of the drought , cows, and everything else I own and send every penny of it to the feds.Then I will get me a cardboard box and move in the SOB.
Report Post »davuf
Posted on April 16, 2012 at 11:14pmWow so this study basically proves that college kids are naive and still believe government programs help people.
Report Post »Psychosis
Posted on April 16, 2012 at 11:42pmbingo
Report Post »CatB
Posted on April 16, 2012 at 11:58pmWait until they grow up .. and find out the truth .. some people are so SLOW .. of course if the government union teachers weren‘t dumbing them down it would help and wouldn’t take so long … Oh MY BAD .. that is exactly what they want .. dumb drones paying taxes …
I hate to pay every dollar I do .. because I know they will just waste it or give it to someone who should be paying themselves .. they don’t help the people they should .. like our old and disabled veterans etc., they are the first ones they want to cut to give money to “green’ crap and other buddies of the government. PUT ME DOWN AS YES I DO HATE PAYING!
Report Post »fatjack
Posted on April 17, 2012 at 12:20amHow much did the IRS pay for that study?
Report Post »JEANNIEMAC
Posted on April 16, 2012 at 11:05pmhttp://sorosfiles.com/soros/
Report Post »tmplarnite
Posted on April 16, 2012 at 11:04pmHooey……………..The political elite steal it faster then candy and they give it to the slothful “over breeding EBT ilk”!
Report Post »spfoam1
Posted on April 16, 2012 at 11:02pmThe day I admit to liking my taxes is the day you can go ahead and put me down.
Report Post »Gonzo
Posted on April 17, 2012 at 9:15amI wouldn‘t mind paying taxes if everyone else was paying and my tax dollars weren’t being wasted on crap. I know that will never happen though, so I hate paying taxes.
Report Post »spfoam1
Posted on April 16, 2012 at 11:00pmThe
Report Post »spfoam1
Posted on April 16, 2012 at 11:40pmNot sure what happened there, LOL
Report Post »Gonzo
Posted on April 17, 2012 at 1:19pmEnd
Report Post »Joss
Posted on April 16, 2012 at 10:53pmI figure the amount that has been ripped off from the IRS due to identity theft would be covered by the “Buffet Rule”. When the government can get to the point of not being a patsy to the crooks, we stand a slight chance at getting ahead.
Report Post »objectivetruth
Posted on April 17, 2012 at 9:05amYeah if they would do away with the eic and the dependency clause roughly half of the ID Theft tax speaking would cease.I;ll go you one better more like 75 to 90 percent .You won’t be able to stamp it out completely.Too many crooks too many means.This however would stop ID Theft for tax purposes.It would also protect childrens IDs.The most sought after during tax season.If people knew how the rate of ID Theft robbery drunkeness and other assorted crimes goes up during Tax season they would scream for their congressmen to do away with the tax codes that allow the EIC and child deduction.They are the two most used and abused credits and deductions.I will be posting later today as to why I know for a fact that certain things are going to change in that area.I’d do so now but I have some place I need to be.
Report Post »macpappy
Posted on April 16, 2012 at 10:52pmhorsehockey
Report Post »The-Monk
Posted on April 16, 2012 at 10:50pm“Despite What You Think, You Don’t Really Hate Paying Taxes”….
Report Post »…they said right after the last words I heard were, “You’re getting sleepy……”
InfiniteSolutions
Posted on April 16, 2012 at 10:50pmPlay with words. Here’s how the study should read:
Everyone is a Tax Payer starting in 2013 and people already paying taxes will get some relief. Fare taxes on the horizon and government to spend the money as if it were the last dollar. The American public will benefit from fare taxes and proper spending, infrastructure to improve and government explotation of it’s own people to stop immediately.
Report Post »The-Monk
Posted on April 16, 2012 at 11:11pm@InfiniteSolutions
Report Post »You may not know it but it’s already happened. There is a mandatory 10% tax that must be paid now for the 2011 tax period. People under 65 and making $9500.00 and less still don’t have to file. I was SURE that I was not going to have to pay this year (only income was some unemployment) and I had to pay over $300.00. What we’re not hearing is all the poor people that just found out they actually owe taxes this year. This will hurt Obama at election time but, I think it’s just another way for Obama to get his “bottom up” thing going.
FreedomPurveyor
Posted on April 16, 2012 at 10:49pm*facepalm*
Report Post »republic2011
Posted on April 16, 2012 at 10:47pmWhat a load of BS. My tax dollars probably paid for this crap, piled higher and deeper (PHD).
Report Post »Mr Galt
Posted on April 16, 2012 at 10:47pmPersonally, I realize virtually NO utility from paying taxes – very few people that actually work for a living do. Moreover, taxes make us work harder??? Seriously?
Report Post »Pouncing Porcupine
Posted on April 17, 2012 at 12:15amRUFKM?
Do you drive on paved highways?
Are there police and fire departments where you live?
Do your children attend public schools?
Do you use a public library?
I could go on and on, but you are obviously a moron, so I will not waste any more time on you.
Report Post »hi
Posted on April 16, 2012 at 10:45pmSorry. I can point out a gazillion examples of people who would like to work less and make the same amount of money. This study is stupid.
Report Post »Greg8812
Posted on April 16, 2012 at 10:45pmWhat a bunch of *********!! When i get my pay stub every 2 weeks and see almost 40% gone i feel real ******. Then i look at all the bills i have to pay and how that 40% that was Stolen form me could help out tremendously i feel almost blind rage! Legalized thief for Obama’s cronies.
Report Post »HorseCrazy
Posted on April 16, 2012 at 11:51pmown my own business I long for the days of that sickening hold on my paycheck. writing the giant checks last week made me physically ill. taxes are awful and totally wasted by our derelict government
Report Post »JACKTHETOAD
Posted on April 16, 2012 at 10:44pmYeah, right. I can’t wait to die too.
Report Post »FloridaFarmGirl
Posted on April 16, 2012 at 10:43pmIf they say it enough it will become true? Don’t think so. I believe many Americans are getting to the point of refusing to pay these crooks any longer. They’ll just waste it or steal it anyway.
Report Post »Detroit paperboy
Posted on April 16, 2012 at 10:34pmWow, your correct ! As long as its for drug addicted pregnant illegal aliens I’m all for it !!!! YAY !!!! Who wouldn’t be ?????
Report Post »