Tax Choice offers hope for disgruntled taxpayers

Dec 10, 2013, 15:07 ET from American Marketing Association

CHICAGO, Dec. 10, 2013 /PRNewswire-USNewswire/ -- Despite the fact that taxpayers are increasingly aware of the danger associated with dwindling Federal coffers, paying taxes remains a generally unpleasant activity. However, new research by Cait Lamberton, Ph.D., at the University of Pittsburgh, suggests that a simple "tax choice" intervention can help increase taxpayer satisfaction, enhance the appreciation of benefits associated with paying taxes, and give a sense of voice to citizens – all without reducing the amount of taxes they pay.


In a paper appearing in the current issue of the American Marketing Association's Journal of Public Policy and Marketing, Lamberton reports three experiments. In the first experiment, homeowners were asked to imagine paying a homeowners' association fee. Some participants were given the opportunity to say how they would like 10% of their fee to be spent, while others were not. Results showed that particularly when homeowners were told they had no option but to pay the fee (as would be the case for a tax), allowing them choice over even a small portion of the fee significantly increased satisfaction with payment.

A lab study then paid students to complete a set of problems, but exacted a "lab tax" from their pay. Again, participants who were given the opportunity to direct a portion of their tax payment across categories relevant to their school (library books, career services, etc.) were significantly more satisfied with paying than participants who were not.

An online survey with a nationally-representative sample of real taxpayers replicated the same effect, showing the positive effect of tax choice on satisfaction across income levels, marginal tax rates, ethnicities, age and gender.

"The voice of the individual taxpayer is increasingly hard to find in the US," says Lamberton. "In addition to increasing satisfaction with paying taxes, the voice provided by this kind of program could have other widespread positive effects: increased accountability, healthy conversations related to spending, and insights for policymakers. While the cynic may say it's impossible, the time seems ripe to try something novel – and very little will successfully reach as many citizens, with as little cost, as tax choice."

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SOURCE American Marketing Association