Perceiving taxes as a contribution or a penalty: the role of framing effect
Creators: name: Filippi, Silvia
Publisher: name: OSF Registries
Year: 2024
Subjects: subject: Social and Behavioral Sciences

description: Negative attitudes toward taxation are grounded in a general loss aversion tendency (Kahneman, &amp; Tversky, 1980) as taxes are, almost by default, equated to a fee or to a penalty, while people generally neglect their beneficial outcomes (McCaffery &amp; Baron, 2004; 2005; 2006). People’s attitudes toward taxation can therefore be shaped by framing strategies. As argued in the previous literature, the label “tax” has, in and of itself, a negative connotation in many countries (Eckel et al., 2005). Framing taxes as a loss and as something taken away from citizens leads to a further enhancement of negative attitudes toward it, compared to taxes framed as a contribution to society and a gain for the entire community. An example of framing effects that enhance the focus on taxes as a loss are studies showing that a policy is preferred when described as bonus rather as penalty (Mc Caffron &amp; Baron, 2004). Other framing strategies are subtler. For instance, tax progressivity is supported more when taxes are framed in terms of percentages rather than in value (the “metric effect”, McCaffery &amp; Baron, 2003; McCaffery &amp; Baron, 2006). 
In the present study we will vary frames through visual representations of the same information, using payslips as material. It is known that people prefer hidden or partially hidden taxes to fully transparent ones (see McCaffery &amp; Baron, 2006), but hidden taxation may pose ethical issues as citizens are ultimately misled. A different strategy is to provide all information in a transparent way, but to make some information visually more salient or to encourage people to process the same information in different order. There are currently striking cross-cultural differences in the way income and tax information is provided on payslips. At times, the pre-tax income is provided as first information to the upper left; for every form of taxation reported subsequently, this amount then decreases, thereby creating a powerful loss frame. In other countries, payslips emphasize the post-tax income. 
In the present study, participants will be asked to imagine that they are going to start a new life in a fictitious society. To improve the procedure’s realism and make the manipulation more effective we will invite participants to make essential choices for their new life in this society, such as buying a house, a means of transportation, and a possible holiday. After completing this task, participants will be randomized in 1 of 3 experimental conditions and will be provided with a fictitious salary of their part-time work in the fictitious society. In each condition we will manipulate the way the salary is presented to the participant, namely with a focus on net (vs. gross) amount of money. Indeed, in the loss condition the pre-tax income will be reported in the upper position, followed by taxation information, whereas in the gain condition, the final post-tax income will be the starting point. Moreover, depending on condition pre- or post-tax income will be made salient through bold characters. Thus, in condition 1 and 2, visual strategies will be used to induce loss or gain mindsets, which are hypothesized to impact tax attitudes. In a third condition we will include completely hidden taxes, reporting only the net salary, with no reference to the initial gross amount of money. In all the 3 conditions a payslip containing all the information about both net and gross amount of money will be made available to participants by clicking on this specific option within the presented scenario. We expect that participants assigned to the gain condition will perceive taxes more as a contribution than as a penalty, compared to the ones assigned to the loss condition. Moreover, we predict that in the condition containing the completely hidden gross salary, compared to the partially hidden gross salary one, people would perceive taxes at least as a penalty. Moreover, participants’ perception of taxes as contribution or penalty, participants’ tax compliance and their demographic information (such as gender, age, working status, educational level, income and perceived socio-economic class) will be assessed.